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October 15, 2007

Disingenuous Diatribe: Compliance is Crap-It’s About the Cash

by

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

Author website

Broker-controlled blogging was a hot topic this weekend. I tried to raise some eyebrows (and awareness) with my speculation about the internet land grab the employing brokers and banks might try.

I think a few things might have gotten lost in the translation. While I said that the brokers and banks will claim that it is a compliance issue, I believe that the REAL reason will be that they want to control the marketing channel to the consumer. Here’s what I said, over on Active Rain:

That will put pressure on the large companies to provide higher compensation to the more effective sales agents. That, will be the problem. Large real estate brokers and banks will severely curb the weblogging efforts of the individual sales agents in the name of “compliance”. In short, the behemoths will say that they can not adequately protect the consumer from the unsupervised local messages being offered by its sales agents. That, will be bunk.

The end-game play, the brokerage firms and banks will make, will always be about the money. Control of the customer has always been a competitive advantage for a large broker or bank. If that competitive advantage is lost, the value proposition of a large firm is lost. They won’t tolerate that loss.

What I’m saying is “The Compliance Argument is Crap- They Just Want Your Money“. I’m telling you this so that you are prepared when the NAR comes at you with the “Internet Compliance Memorandum” from their convention next month. I have no inside information, it’s pure conjecture on my part. This is, as Greg Swann would say, “evil dressed up in a Brooks Brothers suit”. My opinion isn’t biased against big brokerage firms, it will be even worse for the mortgage originators. Our evil is dressed up in custom made suits with Italian loafers- there is no way the big bank Presidents will allow their “salespeople” to live better than they do.

Look at the follow up articles on Active Rain:

A Florida broker suggests that brokers need to Read more

October 15, 2007

Want to make a real difference — in real estate prices and in everything else? Stop pushing innocent people around by force

by

Suburban Phoenix Real Estate Broker

Author website

Why is housing so much more expensive in Los Angeles than it is in Dallas? Higher demand? No so much. The reason is that building new housing in Dallas is easy, while building anything at all in California is a nightmare of absurd regulations. Virgina Postrel explores a study that shows the marginal cost, in land prices, of pushing innocent people around by force with land-use restrictions. (HT Dan Melson.)

Some of the higher price of L.A. real estate does reflect the intrinsic pleasure of living there, as I’m reminded every time I walk out my door into the perfect weather. Some of the price reflects the productivity advantages of being near others doing similar work (try selling a screenplay from Arlington, Texas). All of these benefits—and the negatives of traffic and smog—are reflected in the price of land.

But what exactly is that price? Consider two ways of computing the price of a quarter acre of land. You can compare the value of a house on a quarter acre with that of a similar house on a half acre. Or you can take the price of a house on a quarter acre and subtract the cost of the house itself—the price of construction. Either way, you get the value of an empty quarter acre. The two numbers should be roughly the same. But they aren’t. The second one is always bigger, because it includes not just the property but the right to build. Expanding your quarter-acre lot to a half acre doesn’t give you per- mission to add a second house.

In a 2003 article, Glaeser and Gyourko calculated the two different land values for 26 cities (using data from 1999). They found wide disparities. In Los Angeles, an extra quarter acre cost about $28,000—the pure price of land. But the cost of empty land isn’t the whole story, or even most of it. A quarter- acre lot minus the cost of the house came out to about $331,000—nearly 12 times as much as the extra quarter acre. The difference between the first and second prices, around $303,000, was what L.A. home buyers Read more

October 15, 2007

The Odysseus Medal — Stamping out white shoe corruption, with or without pay-per-click advertising

by

Suburban Phoenix Real Estate Broker

Author website

What is your broker doing when he’s not milking you for overpriced business cards and overpriced letterhead with overpriced envelopes? He’s milking your buyers for overpriced loans, overpriced title services, overprices inspections, home warranties and hazard insurance policies. For some brokerages, there is never enough money to be squeezed out of a transaction. This is white shoe corruption — technically lawfully but oozing sleaze. Someday there will be a successful class action suit and it will all go away just like that.

Until then, heed the advice of attorney Joshua Marks, who wins this week’s Odysseus Medal with Buyer Beware: You Don’t Have to Use the Mortgage and Title Companies Affiliated with your Real Estate Broker. Make Sure You Shop Around!:

A recent class-action lawsuit filed in the state of Minnesota is bringing to light a long-standing issue that affects buyers of residential real estate throughout the country—alleged steering of home buyers to affiliated title, settlement and mortgage companies by large realty brokers. This widely utilized practice often leads to consumers incurring a considerable amount of extra fees and costs when compared with fees and services offered by non-affiliated competitors.

Many real estate brokerages rely on the income generated by clients using mortgage and title companies that are affiliated with them. Brokerages often attempt to maximize their “capture rates” – the percentage of all home-sale transactions that use the affiliates’ services. A consumer typically ends up paying more fees than if he/she selected a non-affiliated competitor. The brokerages justify the additional expense to consumers by claiming that even if the affiliates’ fees or mortgage rates are not the lowest available, the quality and dependability of the affiliates’ services more than compensate for any price differences.

Over the past several years, many cases involving financial relationships between brokerages and their affiliates have withstood legal challenges. So long as the financial arrangement was properly structured to comply with federal anti-steering and anti-kickback rules, the Courts have been reluctant to intervene in these arrangements.

In the Minnesota lawsuit, two buyers filed claims against Coldwell Banker Burnet Realty Inc., one of the largest realty firms in the state. The Plaintiffs Read more

October 14, 2007

Relax, The Department of Justice is solving the real estate commission problem

by

Mega-Producing Realtor

Author website

Last Wednesday the citizens of the United States became a lot better off. I was surprised that no one publicly popped open a bottle of champagne to celebrate. This is not some small thing, it is exciting news. The Department of Justice, Anti-Trust Division launched a website that is going to make the world a better place. The nice lawyers who worked on the research for the site and wrote the copy spent considerable time compiling the information.

This is my favorite page on the site. I liked it a lot because the page it linked from had this quote:

“Brokers typically charge a commission based on a percentage of the home’s sale price. Over the past decade the average commission rate has remained relatively steady between 5.0 and 5.5 percent. As a result, the actual median commission paid by consumers rose sharply along with the run-up in home prices.

Unless broker costs were also rising sharply during this period of time, competition among brokers should have held commissions in check even as home prices were rising.”

The word, “costs” was bold on their site, as well. Unless broker costs also went up (where the brokers could actually prove they had to spend more) competition SHOULD have held commissions in check. My costs have gone up in the past nine years.  Way up.  My acquistion cost per listing and my costs to service each listing has gone up, as well. What they may be shooting for is the correct amount of profit a Realtor should be making.  I wonder if they plan to subsidize those agents and companies who can prove they are making less (like Foxtons)?

I’ve included a link here for any stray DOJ lawyers reading this post to help them. There are many calculator sites on the internet, I choose this one because it came up first when I did a Google search for “consumer price index calculator”. Try it. Type in 1998 = $1.00 and then put 2007 in the year you want to check. I got $1.26. I think you will too.

If you are a Realtor going to a grocery store or a Read more

October 14, 2007

The Odysseus Medal competition — Voting for the People’s Choice Award is open

by

Suburban Phoenix Real Estate Broker

Author website

I had been doing a short list of 20 nominees, but I had the idea that that was an overwhelming number. (It was for me.) This week I cut the short list to 12, and it’s not only more manageable, it seemed to be easier to distinguish the exemplary posts from the many notable entries that had been nominated.

Vote for the People’s Choice Award here. You can use the voting interface to see each nominated post, so comparison is easy.

Voting runs through to 12 Noon PDT/MST Monday. I’ll announce the winners of this week’s awards soon thereafter.

Here is this week’s short-list of Odysseus Medal nominees:

< ?PHP $AltEntries = array ( "Daniel Rothamel -- Social media How your business can benefit from social media right now”,
“Sean Broderick — Google Basewide Google Basewide? One Step Away in California“,
“Brian Boero — On-line real estate Online real estate: It’s anybody’s ballgame“,
“Jim Cronin — Pay-per-click Kick the Pay Per Click Habit: 7 Reasons Why Real Estate Blogging Is Better For Your Business“,
“Joshua Marks — Broker affiliations Buyer Beware: You Don’t Have to Use the Mortgage and Title Companies Affiliated with your Real Estate Broker. Make Sure You Shop Around!“,
“John Cook — Pete Flint A Q&A with Trulia CEO Pete Flint“,
“Jay Thompson — Zolve Zolve – One Agent’s Perspective“,
“Eric Blackwell — Realtor.com How to Stop getting hosed by REALTOR.com…“,
“Michael Price — Secret sauce Mmmmm…..Secret Sauce“,
“Teri Lussier — Viral marketing Web 2.0: Catching a virus at the local dance“,
“Cathleen Collins — Columbus Christopher Columbus… a top producer for the ages!“,
“Brian Brady — Professionalization Trim The Fat…No, Throw Away the Meat and Get a New Cow”
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    Deadline for next week’s competition is Sunday at 12 Noon PDT/MST. You can nominate your own weblog entry or any post you admire here.

    Technorati Tags: , ,

    • October 13, 2007

    Big Trouble Brewing at Google…

    by

    Real Estate Rainmaker

    Author website

    3stooges-pic.jpgRecently, we discussed Google blocking ads against MoveOn.org which has led to much negative talk in the blogosphere about Google. 

    As if their PR department wasn’t working overtime already, ProBlogger alleges Google’s AdSense is committing what appears to be conversion fraud.

    I’ll say it again- Google is invincible today, but if the entire world decides that their shady methods won’t fly, they may be moving to a lower rent building for their headquarters.

    October 13, 2007

    Total eclipse of the Suns . . .

    by

    Suburban Phoenix Real Estate Broker

    Author website

    I have lived in Phoenix full-time since 1993, but, until tonight, I have never once been to a Phoenix Suns game. Other than poker, basketball is the only sport I like, and I love the Suns, I’ve just never made time to go see the home team play. Tonight’s is an exhibition game. My niece is part of the half-time show, and she scored us free tickets. I’m not all that big on crowds and noise, but we saw the world-champion Phoenix Mercury under similar circumstances this summer, and it turned out to be painless and fun.

    The painful part about the Suns is their flawless talent for snatching defeat from the jaws of victory. The fans live in a perpetual state of heartbreak, crestfallen by past disappointments but still somehow convinced that this time will be different.

    Cheryl Johnson ran a video of this tune yesterday, and below you’ll find a different version. The songwriter is Jim Steinman, who wrote all of those teutonic anthems for Meatloaf. For the Suns and all they will do to us again this year, this is Bonnie Tyler expressing Steinman at his heartbreaking best:

    October 12, 2007

    Realtor.com Pencil Sharpener

    by

    Mega-Producing Realtor

    Author website

    Last year I paid Realtor.com about $3,300 to enhance my listings. Now they want to charge me $14,000 for the same thing. Dean Selvey’s rate went from $3,800 to $30,000. Those numbers are not typos. Dean no longer does business with them. I told my sales rep that I would not pay it and that I did not want “a special deal for me”. I wanted their rates put back where they were for everyone. They were supposed to call me. They didn’t call and I don’t believe they are going to call.

    I’ve been through this with them before. Several years ago I flew to Homestore and met with them and got them to put the rates back for everyone. It was the bizarre rates they wanted for posting virtual tours that time. The people I met with then are not there any longer. It is now called “Move”.

    They have a pattern of doing outrageous things to Realtors with their prices – this isn’t new. It is despicable.

    Realtor.com Pencil Sharpener

    October 12, 2007

    Google Blocks Anti-MoveOn.org Ads? Disturbing…

    by

    Real Estate Rainmaker

    Author website

    angry-cat-2.jpgAccording to Mashable, Google may be blocking anti-MoveOn.org ads.  What? I mean… wait, what?  Google should tread lightly- they say that the Republican ad campaign against the MoveOn site violates Google policy, yet MoveOn ads do not.  In fairness, my argument may be in vain- MoveOn may have requested removal for trademark violation which is a deal breaker, but even so-  regardless of my political affiliation, this just doesn’t smell right.

    That said, how many of us place Google ads?  If someone at Google closely follows real estate blogs and finds a sword duel between two bloggers, do they arbitrarily take a side and suddenly block the ads belonging to the dueler they disagree with? 

    Not only is Big Brother acting unfairly, they are damaging their business.  It seems to me that Google should steer clear of taking sides because it could severely hurt their bottom line.  Google is invincible today, but if the entire world decides that their gestapo style political selection process of advertisers won’t fly, they may be moving to a lower rent building for their headquarters.

    October 12, 2007

    Does anyone know any good blogging jokes?

    by

    Mortgage Planner

    Author website

    I am a part of a panel presentation on blogging next week and want to add some levity. The problem is: I’m not funny.

    I’m trying to find jokes about blogging on the Internet and I can’t find a bona fide laugher.

    Q. Why did the blogger cross the road?
    A. Because the WIFI signal was stronger there.

    Does anybody have blogging jokes to share? In the absence of jokes, I’ll write them. And it won’t be pretty.

    October 12, 2007

    Weblog documents, supports transition to new MLS system

    by

    Suburban Phoenix Real Estate Broker

    Author website

    This is my column for this week from the Arizona Republic (permanent link):

     
    Weblog documents, supports transition to new MLS system

    This could get complicated, so put on your thinking cap.

    Here’s the scoop: Beginning last Friday and culminating on July 1, 2008, the Arizona Regional Multiple Listing Service (ARMLS) is going to be switching from Marketlinx/Tempo, our current on-line MLS vendor, to the flexmls system developed and marketed by FBS Systems.

    Bored yet? You shouldn’t be, because, although the primary beneficiaries of this switch will be Realtors, there will be quite a few interesting answers to your own “What’s in it for me?” questions.

    Tech-savvy agents like us are dancing in the streets. At Bloodhound, we have a profound hatred for the kinds of buggy vertical market solutions foisted off on Realtors, so we have built our business on commodity and horizontal software tools. What that means is that systems like Tempo are so hard to work with that we have built our tools around their bugs.

    So that’s the first benefit of the switch for Realtors and consumers alike: FBS is committed to working with the user base to achieve the greatest possible satisfaction. How do I know they’ll follow through? Because FBS President Michael Wurzer is an active participant in the real estate weblogging community. He can afford to lead with his chin because he’s prepared to effect this transition in the most public possible way.

    But what’s in it for you? Here are a couple of teasers, with plenty more to come. If you’re out with your agent next summer and you see a house that sparks your curiosity, your Realtor will be able to look up the listing on the fly by smart-phone. Even better, by next November, your agent will be able to set you up with direct access into the MLS system. You’ll be able to run true MLS searches from your den.

    Some of the geekiest Realtors in the Valley have set up a new weblog to celebrate and document this transition, The Phoenix Real Estate Technology Exchange (PRETexchange.com). Feel free to join and advise us as we make the leap Read more

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