BloodhoundBlog

There’s always something to howl about.

Month: March 2007 (page 9 of 9)

March 2, 2007

The numbers are clearly bogus, Mr. Kelman. Show us the files . . .

by

Suburban Phoenix Real Estate Broker

Author website

Kevin Boer thought he found an error in Redfin’s accounting of its MLS results. What he found turned out to be trivial, which led to another round of war-hooping from the Redfin tribe.

Meanwhile, our new contributor James Hsu has demonstrated that Redfin’s horse runs behind the middle of the pack among big-name Seattle brokerages. In other words, as predicted, experienced traditional agents do out-perform Redfin’s salaried agents.

I finally took a look at Redfin’s spreadsheet today, which they were kind enough to share with me. There are two formulae for calculating the Sales Price to List Price ratio, but I’m not sure that matters. Ten houses sold for less that 65% of list, which I find amazing. More amazing still, nine sold for more than 150% of list. One of them sold for 1,068.526% of list.

One condominium sold for 10% of list price. At that price, I think I might have taken more than one. Condo buyers are smarter, though. Only four of them were willing to pay more than 144%, although a whole bunch sold for more than 110% of list. In Phoenix, they’d be investigating for loan fraud.

Here’s the cute part: Redfin sold 45 condominiums, of which 20 sold for more than its vaunted average performance of 99.340%. Okayfine, fewer than half. For residential listings, however, Redfin kindasorta sucked: Out of 125 sales, 70 homes sold for more than their average.

I named all kinds of reasons for holding Redfin’s claims in doubt. The overarching question — tough agents or tough clients? — is the one Redfin seeks to avoid. Its claims all week have been a textbook example of the Fallacy of Affirming the Consequent: If P then Q, Q therefore P. If Redfin’s agents are tougher than average, then its ratios should beat the market. Redfin’s ratios beat the market (a specious if not actually false claim in any case), therefore Redfin’s agents are tougher than average. The conclusion does not follow, and the raw numbers seem to argue eloquently that the results achieved by Redfin’s clients were caused by Redfin’s clients, not by its agents. The skinflints did Read more

March 2, 2007

Retire? Retire early? Retire wealthy? Unthinkable!

by

Suburban Phoenix Real Estate Broker

Author website

Who wants to think about retirement? I really love to work, and it seems probable that I will continue to churn away until the hardware fails. But I know that at some point I want to stop having to worry about money. I want to write books and explore ruins and compose sappy love poetry in Latin. These are jobs that don’t pay much.

The funny thing is, although I haven’t done much to prepare for my own retirement, I’ve helped a lot of other people prepare for theirs. How? With real estate, of course. Several of my investors are on course to reap over $1,000,000 in profits from their real estate investments alone.

So, not to sound too much like an infomercial testimonial, I know how much wealth can be accrued through judicious real estate investing.

BloodhoundBlog contributor Jeff Brown has just published a White Paper on the power of real estate investing for building your retirement portfolio:

For many Americans, the thought of comfortably retiring before the age of 60 is simply out of the question. The notion of calling it quits and relaxing is appealing, but reality always seems to ruin the party.

Many folks are resolved to working forever—just to squeeze by.

Are you financially prepared to retire on schedule?

Are your investment decisions securing your retirement OR are you simply playing “not to lose?”

It’s not too late to alter your course.

Real estate investing is a proven way to secure retirement and grow your net worth. With careful planning and the proper guidance, you can retire ahead of schedule.

Working with Stelzner Consulting, Jeff outlines the basics of real estate investing for retirement planning purposes. For many readers here, the material may seem basic — or maybe not — but it will be eye-opening to your clients — or to your parents.

Nobody wants to get old, but only happy consequences will result from thinking about your retirement “too early.” Either you’ll be able to retire sooner, or you’ll be much wealthier when you do retire.

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March 2, 2007

Market today should dictate price of home

by

Suburban Phoenix Real Estate Broker

Author website

This is me in today’s Arizona Republic (permanent link):

 
Market today should dictate price of home

How much effort should you put into listing your home for sale?

After the past 15 months, that’s almost a silly question. There are more than 40,000 homes for sale in Maricopa County, with an average time on market of almost four months.

How much effort should you expend to sell your home? Whatever it takes.

We tend to be very careful about the listings we’ll take, because we want our homes sold in four days or four weeks, not four months.

But that leads us to the most important thing you can do to make sure your home sells while others languish: Price it to the market.

Home values in the West Valley are down 12 to 15 percent from the peak. If you’re pricing to the peak market and not this one, your house will not sell.

I want to talk about some innovative marketing ideas, but no amount of marketing can overcome a too-high price. If you are unwilling to price your home to the market, you might as well spare yourself the agony of listing it.

Now let’s go through the home and repair everything. You don’t need to remodel — unless you really do — but everything should work as advertised.

Have your Realtor walk through your home. Anything that you feel the impulse to call attention to, or to divert attention from, should be repaired or replaced. Your most sales-worthy competition is in turnkey condition. So should you be.

Your Realtor should either be a home stager or have a relationship with one. Either way, an expert needs to go through your home with a critical eye, giving you room-by-room instructions on what to get rid of, what to pack away, what to move, what to emphasize.

Your stager might add furniture or decor items, or it may be sufficient to redeploy the things you already own. The point is to enable buyers to move themselves in psychologically, without your own lives getting in the way.

Next week, we’ll talk about some passive marketing tools that can swing the balance your way.

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March 1, 2007

Money-Geek Contest

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

As an would be Money-Geek, I hosted a little competition. The hounds represented.
Michael Cook wrote an analysis of the pricing of real estate “options” dismissing a parallel to the Black-Sholes options pricing model in favor of the binomial pricing model (probablity analysis). VERY econo-geeky! I loved it!

Greg Swann walked us through the trickle-down of a commission dollar as it withered away but built a mountain. QUITE econo-geeky and pleasing to my calculator.

The judges opted for a “twist” on the agent-broker compensation agreement; one blatantly worthy of victory.

March 1, 2007

Five Mortgage Tips that Can Save You Thousands

by

Real Estate Investor

Author website

I thought I would take a brief moment to share a few interesting tips and tricks I recommend when considering real estate. I have compiled these in my limited years of investment and my brief time in school.

Tip #1: Use your mortgage like a bank account. One interesting phenomena in real estate (residential especially) that is surprisingly irrational is the treatment of mortgage. If you have a residential mortgage at 6.5% and your bank account nets a 2.5% saving rate, there is really no reason to put any money in your savings account (you lose 4% on every dollar you deposit!). Outside of cash needed to operate day to day, all of your savings should go to paying off your highest interest debt. A lot of people either don’t think about this or just do not know the true implications of this. Luckily, our newest writer, James Hsu has saved me some time by providing a quick analysis on the value of paying off mortgages early. Not only do you save yourself a tremendous amount of interest by paying off your mortgage early at no additional cost, but you also free yourself of future debt. My recommendation is to set a maximum emergency cash flow you need to live and funnel everything else to your loan.

Tip #2: Pay your mortgage more often. Interest is calculated monthly on most loans (based on principal balance at that time); therefore, paying bi-weekly essentially allows you to pay slightly less interest. While it may only save you several hundred dollars of interest payments a year, this money adds up. If you get paid bi-weekly, send in half your mortgage payment early. This can shave several years off your mortgage.

Tip #3: Consider a second loan to avoid paying PMI. This can be tricky because you want to make sure the second loan cost you less than the mortgage insurance (obvious, but it has to be said). Optimally this will be a second loan that you can repay early, avoiding most of the interest payments. Check with your mortgage broker or banker to see if this Read more

March 1, 2007

How Much is My Agent Charging Me?

by

Mega-Producing Realtor

Author website

Lin Savage wrote:

I am evaluating a proposal from a realtor to sell my current home and cash-pile-notes
represent me in buying a new home (all in Texas). I would like some assistance in clearly understanding the commission structure as I consider her proposal.In the “right to sell” doc that she gave me, it says that I will pay her 6% of the sales price, and then says that she will offer 3% to the buyer’s broker.Later in the doc, it says she will charge a 4% commission if she represents me on the purchase of my new home (which I intend to do) assuming she is paid a 3% commission from the new home seller. She also says that if one of her subagents represents the buyer of my current home, that she will reduce the commission by .5%.

I read your comments about the buyer always paying … I’m trying to follow the money trail to see if this arrangement makes sense for me, and find myself going in circles. Can you explain this to me? Thank you!

Lin,

It looks to me like the total maximum amount you would be paying as a seller is 6% of the sales price of your current home. The 3% she would offer to the other agent is not in addition to the 6% but is money your agent would pay to someone else, who was representing the buyer. If I am correctly understanding what you have written, the 4% would become the maximum (instead of the 6%) if you also purchase your new home through that same agent. And if your agent (or one of her staff of agents) can successfully sell the house themselves (without having to pay a 3% co-broke fee to an outside agent) she will reduce the commission by a half a percent.

If I’m doing the math correctly – and if I were you, I would clarify each of these points directly with that agent prior to signing anything – if her team sells your home and you buy a house through them, the most you would pay is 3.5% and if Read more

March 1, 2007

Lucky number 13: James Hsu, a math god for our pantheon

by

Suburban Phoenix Real Estate Broker

Author website

Today we are adding contributor number 13, James Hsu:

James Hsu is a Realtor and Real Estate Investor working in suburban Seattle. From math to computer science to medicine to web development, James may be the whole Realtor 2.0 package personified.

These capsule biographies are cruel in their brevity, so here is what James said in his own behalf:

I’m a Realtor in the greater Seattle area (Mill Creek to be specific). Trained in the art of math and computer science (and a few years in pre-med), I spent a number of years in web development and then jumped into the telecom world doing product development for a major carrier. When I realized my life had become the script out of Office Space, I turned what I had been doing as a hobby (real estate investing) into my new career path. Outside of real estate, my wife and I have a two-year old son and I’m learning about commercial properties. I’ve found that the numbers game that I love is much more complicated and fun in the commercial world. However, it’s the people in residential sales that makes me smile at the end of a 12-hr work day. When I have time, my other interests are playing sports and video games.

James has his own weblog, Northwest Real Estate Update, which is how we discovered him. James puts everything through a rigorous analysis, but his writing is always thoughtful, readable and fun. We’re honored to have him on board.

As a house-keeping matter, on the subject of feed-guarding, we have added a copyright notice to our about page:

Blanket assertion of copyright: Weblog entries, images, audio or audio-visual content and comments on BloodhoundBlog are the exclusive intellectual property of their authors and are used and archived here by permission. In addition, the form and substance, look and feel, images and user interfaces of BloodhoundBlog, its syndication feeds and any derivative variations thereof are the exclusive intellectual property of BloodhoundRealty.com, LLC, an Arizona corporation. ALL RIGHTS ARE RESERVED. Republication or resyndication of content originating on BloodhoundBlog in any form without expressed, written permission from BloodhoundRealty.com, LLC, is prohibited. Read more

March 1, 2007

An Email From Jim Gatos

by

Mega-Producing Realtor

Author website

In response to this post Jim Gatos wrote:

Russell,I wholeheartedly agree.. I also found (by accident, actually, this

http://www.shaftingrealtors.com/roger_butcher_false_statements.htm

First, a little background info on me.. I have been in real estate since 1985 full time. In all those years, depending on the year, my energy level, and plans, I have closed a high or over 50 sales (with a full time assistant and a buyer agent) and a low of around 12 sales (I was verrrryyy slow and busy with personal issues). Presently I don’t have an assistant. I can say, I learned a lot from Mr. Butcher, in the 1990’s, however, I think his methods are now outmoded and very expensive. I also took Floyd Wickman, Mike Ferry, and Brian Buffini.
Of all those, I would say Floyd & Brian were probably the two I can attribute numerous sales to, and with Roger, I can too say I made money in using his systems.

The problem is they advocate working expireds and fsbo’s. And that’s fine, it was a lot easier before the do not call list. Except Buffini, who is completely into personal referrals. They all have something to say, and I think I find them all invaluable. Hoewever, I honestly think YOU have more to teach us.

The sad part is, a lot of people won’t take up your generous offering because it’s free. Some people have to pay for something to find value.

Having been in the business for over 20 years, I will listen to everything you say. You’re the king, and I think your style is also very straight shooting.

It did concern me a bit to see L. Ron Hubbard quotes when you recommend tipsforsuccess.org, however, honestly speaking, I found the website extremely useful and informative. I signed up for the weekly newsletter, and I even did the goal setting exercises. Honestly, they were the BEST goal setting exercises I have ever ever seen. Some folks are very very apprehensive about Scientology, and even afraid. It seems there are two very strong sides to that issue.

You keep ’em coming. I’ll keep listening!

Thanks

Jim

First, thank you for your response, Jim. I understand, appreciate Read more

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