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Category: Marketing (page 182 of 191)

September 6, 2006

Securing the home-buyer’s place at the table: How two simple reforms can finally result in a full, uncompromised form of buyer representation . . .

by

Suburban Phoenix Real Estate Broker

Author website

Executive summary: This is long, and it’s written (I hope!) for ordinary people, not real estate professionals. But I want for real estate professionals to be aware of this argument, because I think it solves several of the knottier problems affecting our industry. Here’s a quick summary of the essay:

  1. Buyers should negotiate the buyer’s agent’s compensation in detail and prior to looking at any homes
  2. Sellers and listing agents should concede funds directly to the buyer to be disbursed at the buyer’s discretion to compensate the buyer’s agent

Either of these two reforms, or ideally both, will finally, fully empower buyers as supervisory employers of real estate agents in the way that sellers always have been.

If you discuss this in your weblog — and I think you should, in order to hear what your clients think — I would appreciate it if you would either link back to this essay or use the Technorati tag “compensation for buyer representation” (that exact keyword, without the quotes), so that I can track the conversation.

–GSS

Securing the home-buyer’s place at the table: How two simple reforms can finally result in a full, uncompromised form of buyer representation…

I was at a real estate seminar a few years back and the instructor happened to ask what kind of commissions Phoenix-area Realtors were getting on their listings. “Six percent,” someone said. “Five percent,” said someone else. “Five percent.” “Five-and-a-half.” And then a very beautiful young man, not quite overdue for his second shave, stood up and said, “Seven percent.”

“Just keep thinking that way,” the instructor replied. “Someday you’ll make yourself believe it.”

This is a true fact of real estate, widely if not universally known: Sellers negotiate commissions. Routinely. As a matter of course. “How much do you charge?” is often the first question blurted out at a listing appointment. You undoubtedly already know this, as well, if you’ve ever sold a home in your life — or talked to anyone who has. Yet for some reason, people persist in pretending that the six percent commission is still ubiquitous — if it ever was.

As a matter of disclosure, we routinely Read more

September 6, 2006

Real estate, reality TV, dual agency and the nefarious influences of the Dark Prince . . .

by

Suburban Phoenix Real Estate Broker

Author website

Daniel Rothamel musing on “Million Dollar Listing”, a real estate reality show on the Bravo TV network:

The fact that dual agency is legal had to be the direct result of Satan himself lobbying real estate commissions all over the country. The only person that EVER benefits from dual agency is the agent. His wallet gets fatter, and the buyer and seller get less representation. Only Satan would call that fair.

Actually, that would make a fun “South Park” episode: Satan versus Saddam at the Department of Real Estate.

I watched the show for the first time last night, but I was playing my guitar (loudly and badly, the way god and Leo Fender intended), so I missed a lot. I did see one agent who was clearly torquing her clients to buy when they weren’t ready to buy — way over the line. I think this might be the dual agent Daniel is talking about. But later in the show the buyers seemed to be completely happy. Maybe they were awed by the TV cameras and didn’t want to make a scene. Maybe they don’t understand reality TV…

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September 6, 2006

No Memory Hole at Redfin.com weblog, where the dance of the mantises goes on forever . . .

by

Suburban Phoenix Real Estate Broker

Author website

(This teeters right on the brink of being either gossip or a pissing contest. I want to document the facts in a permanent way, but I won’t be in the least offended if you press on without reading this.)

One of the interesting defects of the enblogged globe is the de facto Memory Hole effect. If I change the appearance of a weblog, every page will reflect those changes, as though they had been that way forever. If I change a post, it’s changed forever, with no reference to its past form. There are various web-based Wayback Machines, but there is no built-in version history so that you can track what I have done — perhaps with an eye to judging my motives.

It could be there is no Memory Hole at Redfin.com’s weblog.

From a comment by Glenn Kelman at Rain City Guide:

Regarding that reference, I had tried to explain that we deplore a particular tactic, not real estate agents, and I apologized. Later, before returning to this blog, I removed the reference from the blog, and inserted an apology with the same prominence as the original reference. This is because I respect Dustin, because I regretted the implications of my own statement, and because we all believe in fair, civil discourse.

And, indeed, this is the way that particular text appears on the Redfin.com weblog’s home page and at this permalink:

But there is no Memory Hole. The original entry is still on-line:

The reader comments are copied from the old version to the new, but the old version has not been supplanted by the new version, but, rather, duplicated and then edited.

I am drawing absolutely no inferences from this, simply taking note of a body of facts.

Further notice: I just went to set the trackbacks for the two separate permalinks — and they’re the same.

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September 5, 2006

Realty Reality: Lou’s lament in 22 unhappy photos . . .

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Suburban Phoenix Real Estate Broker

Author website

I’ve written a bunch of these stories, and I’ve got a bunch more in me — I did CRS the hard way. Most of them have happy endings. This one does, too, I suppose, but the middle gets pretty morose. I’m telling the story to illustrate how badly things can go wrong in real estate despite the best preparation, despite the best of intentions.

This is a story about Lou, a long-time client whom I admire very deeply but have never met in person. He found us on the internet, and he’s been with us through thick and thin for coming on three years. In that time we have bought five houses, failed to buy many more, and we’ve sold three. There’s one more out there that we’re trying to sell right now.

Lou is a cop, a detective for a police department in a big California city. He makes a good living in his forty-hour week, then double that or more on over-time that never seems to end. Because of this, he has been able to invest in real estate for years, buying, fixing and flipping properties in California. He came to me when the prices in California got too high.

In the midst of the price boom here, we bought five rental properties — one condo and four single-family-homes. Lou was most interested in buying homes with tenants already under lease, but this put us into very competitive bidding situations. We were careful to buy into properties that were either cash-flow positive or at least neutral, so we wrote a whole lot more contracts than we got accepted.

I was working by myself on my end. I don’t know if Lou has ever been to Phoenix, but I’ve never caught a glimpse of the man. He would review listings I had sent by email and ask me to follow-up on those that seemed promising. I would do drive-bys, taking photos and looking for red flags. Then we would run the numbers on the property, and, if it made sense, write the contract. I have worked with a lot of game investors, but none Read more

September 5, 2006

Dissecting Glenn Kelman of Redfin.com . . .

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Suburban Phoenix Real Estate Broker

Author website

From comments at Rain City Guide. I didn’t address this weblog entry from Redfin.com CEO and broker Glenn Kelman because I wasn’t sure how to strike a balance. But today, Dustin Luther offered this:

For those that haven’t seen Glenn’s comments on his blog, I highly recommend heading over to this post.

In case it wasn’t clear, Glenn is clearly not worried about making friends with real estate agents, and even compares listing agents (who don’t want to show their properties to Redfin buyers) to praying mantises who eat their pray: “a grisly illustration of realtors’ hopeful but incorrect argument that showing their own listing can procure cause for garnishing the buyer agent’s commission.”

P.S. Greg: he has a special treat over there for you as well…

This was my reply to him:

> Greg: he has a special treat over there for you as well

I saw it last night. I concluded that the man is a jackass and a fool. In rank order the fools would seem to be 3. Kelman’s clients, 2. Kelman himself, and 1. Kelman’s investors.

Debunking Zillow.com gets dozens of unique hits every day. Let’s go get sued, a blueprint for bringing litigation against cowbird brokers scores fourth when you search for Redfin.com. I think the people at Zillow.com have been very deft in the way they have dealt with criticism. I think Kelman is drunk on his own publicity. The route to fame can be long and uncertain. But it’s just a short hop from there to infamy…

Hustling uninformed newspaper reporters is one thing, but I’ll bet the man doesn’t have the guts to defend his business model in public against an informed questioner.

Further notice: Kelman adds a comment at RCG.

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September 5, 2006

Detailing the mechanics of the Redfin cost shift . . .

by

Suburban Phoenix Real Estate Broker

Author website

Taking on the New York Times’ fawning coverage of Redfin.com, Jim Kimmons at Transforming Real Estate details the details behind the cooperation/compensation model of real estate brokerage:

The contention that the listing agent should be pleased to show an “eager buyer” the home when they come with no agent is just not going to function in the way presented. Let’s say that I’m a listing agent and have say 20 listings. I know that many homes get shown upwards of 40+ times before selling, but let’s use 30 for an example. Also, I’m not sure how you can call someone an “eager buyer” when you’ve never met them and they’ve never seen the home, except in a drive-by. Now, using an hour each as a conservative example, if every buyer was a Redfin client, then this listing agent would work about 600 hours and drive a lot of miles in meeting “eager buyers” at their listings. Buyer agents do this all the time, but that’s what they get the 3% for.

Don’t stop there. There’s a lot more that Jim covers.

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September 5, 2006

Phoenix trolley planner: “Our job is to make sure we build something that will have riders and be successful”

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Suburban Phoenix Real Estate Broker

Author website

How about a roller-coaster? Much more likely to have riders and be successful than a trolley in Phoenix — the most vast, most sprawling and most car-addicted city on earth.

The leader in today’s Republic details some ideas about putting trolley lines in even dumber places. It turns out that really, really rich people can’t abide not having their throughfares blocked by empty trolley cars, while the urban poor prefer to ride crowded buses — at least until their bus routes are cancelled to subsidize the trolley.

The last time a trolley system made money in America, there was less than one automobile per household. There are neighborhoods in Metropolitan Phoenix where that statistic is still true — and the trolley goes nowhere near them. Instead, it will tootle from one shiny-people destination to the next, an instant relic that very prosperous people can point to with pride — as they speed by it in their Jaguars…

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September 4, 2006

Working the numbers on real estate business models . . .

by

Suburban Phoenix Real Estate Broker

Author website

Altos Research on Redfin.com and other real estate business models:

Sales guru Jeffery Gitomer puts it this way, “if you have to compete on price, You Suck!”

We all invoke financial services as the analog for real estate. What isn’t commonly noted is that as technology swept through the financial services biz, two things happened: prices went down (e-trade et al) and prices went up (hedge funds). Why did prices go up? The same reason they always do. When you provide more value to a customer, you can (and should) charge more. I for one am looking for the real estate agents/brokers/sites that blow away their clients so completely with service, that they’re happy to pay more than 6%. Those are the innovators to watch.

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September 4, 2006

Remarks from Redfin.com Broker Glenn Kelman . . .

by

Suburban Phoenix Real Estate Broker

Author website

Glenn Kelman, chief executive and broker of Redfin.com, posted a comment to one of my entries about that company. I replied to him there, but I’m posting the exchange here, as well, frankly because I consider it Big News.

Here is Mr. Kelman’s remark:

Thanks for this thoughtful comment Greg. Many Redfin customers decide to refund part of the commission to the seller, but this is their choice: the money we refund is theirs, so the choice is theirs. Regards, Glenn

And here is my somewhat lengthier reply:

There we go! Truliamazing, times two!

> the money we refund is theirs, so the choice is theirs.

I agree with this, of course, but I wonder if you would be willing to address the larger issues I have raised here and here (and elsewhere for that matter).

I believe as an Arizona State licensed real estate broker that Redfin.com’s (and BuySideInc.com’s) policy of sending buyers unattended to listed homes is an abandonment of agency, a clear break in the chain of representation. Your company in particular has proved very successful at portraying reluctant listing agents as the bad guys, but, in fact, I believe that cooperative effort is the reason that listing agents recommend that sellers provide compensation for cooperating brokers. You are certainly free to do as you choose with your earned commissions, but my argument would be that you have not earned them by any standard of procuring cause that would be applied to any other real estate brokerage. Can you defend your company’s representation of its clients and therefore defend its having earned the commissions it has disbursed?

Another way of asking the same queston: How much commission would Redfin.com have earned if it sent a client unattended to a new home subdivision?

All that having been said, I think you will get away with what you are doing. But if you do, it seems very reasonable that listing agents will either stop offering co-broke commissions altogether or will condition those commissions on true cooperative effort. No doubt the New York Times will deem this unfair, but in fact the sales price of the home will be lower Read more

September 4, 2006

Labor Day Linkathon: Catching up with real estate topics raised here and elsewhere . . .

by

Suburban Phoenix Real Estate Broker

Author website

From a comment here, here is the full context of Marlow Harris’s remarks to the New York Times:

“The only complaints I hear about are those noted on the official Redfin blog or talked about by their CEO in newspapers. As I mentioned in my previous email, they have such a tiny -.00001% of the market, I’m sure no one takes them very seriously.

“However, someone may be trying to manufacture controversy, even going so far as to bait other real estate practitioners, invite “war stories” on their blog, and whine to Congress and to newspaper reporters, that they’re being treated unfairly.

“With such dismal sales, if you’re hearing stories from a certain Redfin CEO, I’d take them all with a grain of salt. He can’t blame all his problems on other real estate brokers.”

There is much, much more from Marlow on Redfin.com at 360Digest. Which is not to imply that reaction to the New York Times article is universally negative: The Real Estate Bloggers loved it.

Ardell has ideas on training agents to negotiate commissions equitably. In contrast to Redzilla, a matinee monster at best, Ardell’s ideas combined with the innovations outlined by Eileen Tefft at Rain City Guide suggest a truly new business model for real estate brokerage.

Stephen Jagger at Ubertor raises some additional points on the subject of building custom web sites for home listings. I promise to come back to this topic sometime soon. There are four categories of clients for these custom web sites, and so far we’ve only talked about two of them. In the mean time, though, I think Ubertor builds gorgeous web sites.

ZillowTalk: ChitownLiving on the Sellsius&176; poll results. Michael Daly at the Hamptons Real Estate Blog explores the consequences of hubris in business. My own name is mud on both coasts, so I’ll do what I can to make things worse. Here’s what Michael Daly says:

It will take a number of lawsuits or perhaps even a class action suit against Zillow before they put the appropriate disclaimers on their site.

I’m kinda thinking that they’re on the verge of something like this right now. Take note of Read more

September 3, 2006

If Bill Clinton ran Redfin.com . . .

by

Suburban Phoenix Real Estate Broker

Author website

Of the two “innovative” cowbird brokerages discussed in this morning’s New York Times, the stronger of the two is BuySideInc.com. They’re rebating even more of the buyer’s agent’s commission than is Redfin.com, but their actual profit center is in originating the loan — a well-understood, fast, cheap, office-job function. Even this is not without complicating factors, especially RESPA. But in pure dollars, BuySideInc.com will make more money per buyer than Redfin.com.

But if Redfin.com really wanted to isolate traditional listing agents, they would triangulate Clinton-style. Instead of giving two-thirds of the buyer’s agent’s commission to the buyer, they would give one-third each to both the buyer and the seller. That way, the seller would regard Redfin.com not just as another source of buyers but as a potential small windfall at close of escrow. The interests of buyer, seller, and Redfin.com would coincide, at least to that extent, and the listing agent would feel a very strong pressure to get his own ass on board.

I still think Redfin.com is not earning its commissions, using the standards of procuring cause that would apply to any other brokerage, but a strategy like this would be much more effective, in the long run, at getting away with it than whining to the New York Times…

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September 3, 2006

“Trends are changing daily” — is that real estate news or a weather report?

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Suburban Phoenix Real Estate Broker

Author website

“Trends are changing daily,” says Catherine Reagor in her column in the Arizona Republic. Was I a younger man, I might trouble myself to wonder about a “trend” that lasts less than a day. But I am older, by now, and wiser, and sick to death of picking on Catherine Reagor. At least this week, it is not she herself who is making things up, but rather a sales meeting full of crybaby Realtors.

Here are some facts, even though real estate reporting is evidently supposed to be fact-free. So far, there are 6,124 August sales recorded in the Phoenix-area MLS system. There are always errors in the system at the turn of the month, so it will be a few more days before the numbers settle down. The last relatively normal August was August of 2003, when 7,648 sales were recorded. So this August is weak by comparison, but it’s hardly the end of the world. We’re up about 50 houses over July 2006, and average prices are at 99.18% of their July value. I’ll have more later in the week, when the listings get cleaned up.

Meanwhile: “Phoenix has been ranked No. 1 in a new study of best relocation destinations.” Who’d a thunk it? Oh, wait… That would be me. It turns out that reports of our demise have been greatly exaggerated.

For Reagor, for the Republic, for the crybaby Realtors, for crybabies everywhere: Things might not ever be as good as you hope they’ll be, but rarely are they as bad as you might fear they could be.

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September 3, 2006

Work the numbers: Redfin.com is not much of a business . . .

by

Suburban Phoenix Real Estate Broker

Author website

If the New York Times devotes 2700 words to a puff piece on Redfin.com, how many of those words would you expect represent the contrary point of view? If you said 1,350, to reflect the chimerical idea of balance, you haven’t spent much time reading the New York Times. If you said zero, you spend too much of your time reading Little Green Footballs. The Times would never, ever present a completely tendentious article without at least a feint at balance. Marlow Harris, whom I admire no end, gets to offer this extensive and comprehensive counter-argument:

Some agents say the biggest problem with Redfin is that it complains too much. “Someone may be trying to manufacture controversy, even going so far as to bait other real estate practitioners, invite ‘war stories’ on their blog and whine to Congress and to newspaper reporters that they’re being treated unfairly,” said Marlow Harris, a Seattle agent with Coldwell Banker Bain Associates who also runs the real estate blog 360digest.com.

I can’t imagine how much of Marlow’s time the Times wasted in order to stuff her mouth with a straw man, but I will bet a very tall dollar this is not all she had to say.

In reality, the piece is Redfin.com PR, but the hook is a couple who were turned away, like Mary and Joseph, by an evil innkeeper of a real estate agent. I’m going to fisk this article a little, not a lot, because it’s interesting.

First, did the Times lack the opportunity to present a contrasting point of view? Of course not:

But the seller’s agent refused to show it to them. Why would she turn away an eager buyer?

How about because she could double her legal liability for no additional compensation? Was that so hard?

“You can find out more on the Internet about an eBay Beanie Baby than you can about a $1 million house,” said Glenn Kelman, chief executive of Redfin, a licensed broker in Washington State and California.

Oh, good grief. I think the “secret” fields in an MLS listing are stupid, but there are damn few of them, and none of Read more

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