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September 7, 2007

You can use the No-Hassle iPhone to hang up on the NAR, but first attend to those Odysseus Medal nominations

by

Suburban Phoenix Real Estate Broker

Author website

Wanna hear something amazing? Twenty-one months into the downturn, and the NAR is still adding new members. Not much growth, mind you — not cancerous growth — but growth is growth.

I want to get back to the idea of alternatives to the NAR, but I’ve been busy — that’s because the real estate market is bad.

Dan Green and Tom Royce are all over the idea, but, among other things, I’ve been busy selling a Russell Shaw listing. Definitely no-hassle on my end. His team members are as sweet and thoroughgoing as the man himself.

Meanwhile, Apple’s stock price is down for three days running, so Robert X. Cringely hints that it’s time to buy. What did he miss? The show-stopper at the end of the Leopard product release is going to be a 16GB iPhone for $499. You heard it here first.

Why would you need that much memory in a mobile phone? So you can watch the Compleat Russell Shaw on the flight home from Christmas at Grandma’s, of course.

But: Until then, there is an Odysseus Medal competition to consider. Deadline for nominations is Sunday at 12 Noon PDT/MST, but if you know of something insanely great, your own work or someone else’s, nominate it now while it’s on your mind.

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September 7, 2007

Appraisal, inspection could swing the balance toward sellers

by

Suburban Phoenix Real Estate Broker

Author website

This is me in the Arizona Republic (permanent link):

 
Appraisal, inspection could swing the balance toward sellers

It’s not fun to be a home seller right now. We’ve talked about why your home must be priced right, prepared right and presented right in order to sell. But — guess what? — even that might not be enough.

There are subdivisions where twenty or more essentially identical houses are for sale. There may be at most one buyer for all of those homes in any given month. Still worse, that buyer’s loan might not hold up all the way through the closing process.

The good news is that the belt-tightening the mortgage industry has been going through may be loosening up by a notch or two. There will be no more reckless loans to unqualified borrowers, but buyers with good income, good credit and good debt ratios are qualifying for very aggressive interest rates. And jumbo loan borrowers are being welcomed more warmly than they were a week or two ago.

But the problem remains: There can be so much inventory that buyers are literally paralyzed. On the one hand, they want to see everything before making a choice. On the other, they rightly fear that prices might be even lower a few months from now.

What should you do as a seller? Whatever it takes.

Here are a couple of ideas:

First, have the house appraised, price the home below that appraisal and leave the appraisal report out where buyers can see it.

Second, have the home professionally inspected. Do all of the repairs in the inspection report, then have the inspector back to confirm your work. When everything is ship-shape, leave that report out where buyers can see it.

You can’t control lenders or interest rates. You can’t control the price of homes into the future. What you can do is take away every buyer objection over which you have control.

Nothing matters more than price, so if you won’t price your home to the current market, you needn’t bother with anything else. Your house will not sell. But if you’re committed to doing whatever it takes, these ideas could swing Read more

September 6, 2007

Unlike venture-capital vampire Redfin.com, Iggy’s House seeks suckers on Wall Street

by

Suburban Phoenix Real Estate Broker

Author website

John Cook’s Venture Blog:

Despite challenges in the national real estate market, Chicago discount real estate service Iggy’s House plans to try its luck with an initial public offering that could raise up to $15 million, according to a filing with the Securities and Exchange Commission.

If successful, that would be just $3 million more than what Seattle-based Redfin, one of Iggy’s primary competitors, raised in its venture round in July.

In addition to traditional real estate firms such as Prudential Financial, RE/MAX and Realogy, Iggy’s House also faces direct competition from upstarts such as Redfin, ZipRealty and iNest. It also may face competition in the future from Zillow.com, HouseValues and others, according to the filing.

Iggy’s House, you’ll recall, is the ultimate discount lister.

How ultimate? All the way. Allowing for the buyer’s agent’s commission, Iggy will give you a limited service MLS listing for free. A sister company, BuySideRealty.com, will rebate 75% of the buyer’s agent’s commission when they (don’t actually) represent you as the buyer.

How can they do it? They’re lenders. Both real estate businesses exist to drive loss-leader business to their loan brokerage business. Pondering the spreads on the loans they underwrite will probably repay your effort.

And: Even though the company is appealing directly to share-holding suckers, rather than the venture capital suckers favored by parasite sites like Redfin.com, Iggy is so far living up to what you might anticipate for its financial performance: “Iggy’s House posted revenue of $425,000 and a net loss of $5.1 million last year.”

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September 6, 2007

What could be worse than our current capricious zoning laws? New even-more-capricious zoning laws — imposed by zealots

by

Suburban Phoenix Real Estate Broker

Author website

Tipped again by Poor and Stupid, novelist Orson Scott Card discovers everything that’s wrong with one-size-fits-all municipal zoning laws:

I’m not urging that the government mandate any more absurd mileage requirements for cars, or ration gasoline, or any other absurd proposals. Hybrids are great, for the things they’re great for. But even hybrids still burn gas, and if we could drive less, then hybrids would save even more gasoline.

In fact, all that I want government to do, locally and at higher levels, is to stop with the regulations that force us to use cars for everything, and replace them with regulations that permit us to walk or bike.

Right now, in most locations zoning laws force developers to create neighborhoods with houses of about the same size and cost, on roughly the same size lot, while forbidding any retail within walking distance.

Meanwhile, those same laws generally forbid the construction of new neighborhoods that mix income levels, house sizes, and densities.

(In Greensboro, we do have mixed-use zones that permit some aspects of a walking neighborhood, but it is only used in specific new developments, not for regions of the city large enough to make a difference. Most of the city is still zoned in the old way.)

It’s as if government looked at the beloved old neighborhoods that people drive through with yearning and nostalgia, and banned them.

The result is that the poor are shunted off into isolated islands, where crime thrives, employment is remote, and the poor have to own cars just to get a job. Meanwhile, most people can’t walk or bike to any useful destination, because the law has forbidden retail or office buildings anywhere near where people live.

I have no problem with allowing people to continue to live in pedestrian-hostile neighborhoods, if they want to. I just want the law to allow the construction and adaptation of low-car-use neighborhoods.

That means allowing low-parking retail to be built close to new and existing residential neighborhoods, like the old-fashioned “Main Street” town, where a commercial strip leads immediately to residential side streets.

In a town the size of Greensboro, this doesn’t mean one downtown that Read more

September 5, 2007

Fantastic Interview with Gary Keller

by

Mega-Producing Realtor

Author website

I just received, via email, the September newsletter from Custom House Publishers. It had the large post-it you see below. Clicking it took me to the Quicktime video you will see. I could not over-recommend watching it and paying close attention. For some years I have considered Gary Keller to be the most knowledgeable person on the planet when it comes to the subject of correct and useful information regarding agent success. There is nothing he says here that is not valid and useful. I personally have five Custom House papers (mailing about 45,000 papers a month) but that isn’t why I am passing this along.

Once all of my mentoring videos and audio pod casts are cataloged and made available on a single page, I would hope this link occupies a prominent position on that page.

Enjoy.keller_post-it

 

September 5, 2007

Why do traditional Realtors despise discounters like Redfin.com?

by

Suburban Phoenix Real Estate Broker

Author website

This is me, guest-posting at Blown Mortgage while Morgan Brown is on vacation:

So why is a limited-service listing unlikely to succeed? If you’re in a high-demand market like Seattle, it just might. But in most of America, right now, a home must be marketed perfectly from the first day or it will sell slowly and at a deep discount — if at all.

The one difference between a true FSBO and a limited-service listing is the searchable record in the MLS database. The home will be offered by-owner in all other respects: Priced wrong, prepared wrong and inaccessible to buyers and their agents. This is not a necessary consequence, but it is very, very common. In the case of our newly-listed competition, the home is offered at $200,000 over its market value. Presumably because of the recent re-financing craze, it is encumbered at about $75,000 over market. This home will not be a threat to our listing.

But it wouldn’t be a threat even if it were priced right. There are too many weapons that a professional home marketer will bring into battle for an amateur, no matter how dedicated, to compete. A limited-service listing comes with none of the professionals’ arsenal. So much the worse, it shouts out a warning to skilled buyer’s agents to stay away.

Why would that be so? Because even if it’s competitively priced, even if the buyers love that particular home, it is being marketed by an amateur who will, in all innocence, make egregious errors again and again. Worse, the seller will have no one to turn to for advice, exposing the buyer’s agent to double the legal liability in the transaction, potentially even creating what a judge might regard as an undisclosed dual agency.

The same situation obtains in reverse with discount buyer’s agents like Redfin.com or Buyside.com. Their vaunted cost savings come not from their technology, nor even from picking the low-hanging fruit of well-prepared buyers. The savings they pass on to the buyer come from pushing the costs of buyer representation onto the listing agent.

I wrote this essay a couple of months ago, when Redfin.com Read more

September 5, 2007

This is what it smells like when Zunes die…

by

Suburban Phoenix Real Estate Broker

Author website

Going to the Social? Not anymore.

News abounds. There will be better coverage in an hour or two. For now:

  • New red iPod Shuffle
  • New iPod Nanos with iPhone-like video
  • New iPod Classics with iPhone-like video — up to 160GB
  • New iPod Touch — a phoneless iPhone with WiFi, iTunes by WiFi and Starbucks music previewing (hold your nose for that last bit of flatulent decay from the Zune)
  • New iPhone price, 8GB version only going forward for $399

And remember that Leopard is still out there this year…

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September 5, 2007

News You Can Use – Real Estate is a Business

by

Realtor, Associate Broker

Author website

When I want the news I can use, I head straight for the San Diego Union Tribune. From yesterday’s Currents section, in an article addressing the health benefits of swimming as exercise, they gave us this bit of sage advice:

Who is swimming not good for?

Swimming is not a good activity for someone who doesn’t know how to swim.

I think this should be an ongoing feature series. “Piloting a jetliner is not a good activity for someone who doesn’t know how to fly”, “Skydiving is not a good activity for someone who doesn’t have access to a parachute”, and “Attending a Barry Manilow concert is not a good activity for someone who…” – Well, that last one is just plain wrong.

Do you know what else is just plain wrong? Attempting to grow a successful business is not a good activity for someone who lacks the ability or willingness to think like an entrepreneur, to constantly evolve, to continually strive for excellence and to establish their brand as superior to that of the competition.

I suggest that rather than the Broker’s new-hire training beginning and ending with lessons in the fine art of bulk-mailing, working your sphere, passing out pumpkins on Halloween and flags on the 4th of July, and sitting open houses, the first lesson should be a boot camp on business basics.

New agents, and even the veteran hangers-on who are feeling stalled and challenged, would do well to start thinking like the self-employed business owner they are. Once licensed, it is not your divine right to make a living in real estate. It is not preordained that, once assigned a cubicle and a business card, you will enjoy untold riches or even eat. There are tens of thousands just like you. Only when you reach the point where they are NOT just like you and your customer knows it will you realize any consistent success.

Keep Inventing

The minute your product is finished, so are you.

Years ago, I had one of the first “car phones”. In those days, it was cutting edge, truly a thing of envy. It was hard-mounted to my dash, had the little curly Read more

September 5, 2007

Instead of a bailout of troubled borrowers, why not implement an equity-sharing plan?

by

Suburban Phoenix Real Estate Broker

Author website

Via Poor and Stupid, TCS Daily has a free (or at least free-er) market solution to bailouts for struggling mortgage borrowers.

The idea? “[A] debt-for-equity swap with sub-prime borrowers.” Borrowers would give up 20% of their downstream equity in their homes in exchange for 20% debt and therefore payment relief:

To implement the swap plan, government would create an agency to buy equity from troubled borrowers. Call this new agency Bailie Mae.

When a borrower swaps with Bailie Mae, the borrower’s monthly payment of principal and interest immediately falls by 20 percent. Instead, Bailie Mae provides the other 20 percent of the monthly payment. The borrower still has to pay the full cost of other components of the mortgage payment, such as taxes and insurance.

As long as the borrower makes the new monthly payment, he stays in the home. When the home is sold, 20 percent of the gross proceeds go to Bailie Mae. At that time, Bailie Mae will be responsible for repaying 20 percent of the outstanding balance on the mortgage loan.

For example, suppose that the outstanding balance at the time of the swap is $100,000, and the borrower’s monthly principal and interest is $800. With the swap, the borrower’s monthly principal and interest payment would drop to $640, and Bailie Mae would pay $160 per month.

Several years later, the borrower gets a job in a new city and sells his home. By this time, the outstanding loan balance is, say, $90,000. Bailie Mae is responsible for 20 percent of that, or $18,000, with the borrower responsible for the remaining $72,000. If the home sells for $110,000, then 20 percent of that goes to Bailie Mae, which means $22,000. Another $72,000 is used by the borrower to pay off the loan, leaving $16,000 to go to the borrower.

Suppose that the house is sold for only $80,000. In that case, Bailie Mae gets only $16,000 even though it still has to pay $18,000. The borrower gets nothing, and $62,000 goes toward paying off the loan. The cost of the remaining $10,000 shortfall in paying back the loan is borne by the responsible lending Read more

September 4, 2007

ARMs Look Scary Before They Look Good or (How Wall Street Dupes the Little Guy)

by

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

Author website

I don’t look real smart today, do I ?

Mortgage rates in general took a fairly substantial dive during the previous week with longer term rates dropping double digits in most cases and some rates returning to mid-2006 levels. However, the Mortgage Bankers Association reported a spectacular increase in the interest rate of the one-year adjustable rate mortgage (ARM).

Hold on just one second ! Now is the time when you SHOULD be a contrarian. The alternative title of this post is the one you should read. Wall Street has always been ahead of the little guys and gals. They look into the future, and try to get money committed to best profit off of their forecast. If an annual ARM rate is rising above the fixed rate mortgage rate, Wall Street is trying to induce borrowers to lock up money.

Why would anybody in their right mind do that?

Wall Street thinks rates are going to drop like a ball off of a table. They think the inverted yield curve we’ve seen is a precursor to a recession. The inverted yield curve has indicated an impending recession some 85% of the time since the Civil War – which side would you bet on if this were Vegas?

Nobody likes the R word. I’ve been sensitive to the R word since Bill Gross of PIMCO talked about the housing recession in late 2005. He, and I, are more sensitive to the concept of a “housing recession”; we’re both in California. It’s estimated that close to 10% of the jobs in California are related to the housing industries be they Realtors in Rialto or a painters in Petaluma.

Why the Wall Street shuffle with higher ARM rates? They want you to take the risk of a fixed rate so they can stick them in the MBS pools for a few years. They know those loans will sell at a premium in 12-18 months- when rates are dramatically lower. To continue the Vegas Read more

September 4, 2007

What would you do with a totally free mobile phone?

by

Suburban Phoenix Real Estate Broker

Author website

We haven’t talked about the gPhone rumors, the possibly-apocryphal mobile phone alleged to be forthcoming from Google. I read about vaporware all the time, but I tend not to remark on it. Today is different.

Consider these conjectures from Seth:

My non-inside prediction of what the third-generation phone they ship will be like:
(Relatively) free
(Relatively) open
Ad supported

So, any carrier can offer it (hence the free part), any developer can easily modify it/enhance it, and the thing is paid for by location-aware permission marketing. Anticipated, personal and relevant ads based on who you are, what you do and where you are. GPS-coded photographs from all over the world automatically appended to Google Maps. Free calls if you’re on a wifi network. And it won’t be nearly as design-wonderful as an iPhone. But it will be addictive and in many ways, better.

Emphasis: “Free calls if you’re on a wifi network.”

Stipulate all of this just for the sake of the argument. If it’s not true of the gPhone, we’re probably headed in this direction, perhaps even toward “free” ad-supported cellular service.

First: This could easily be the primary phone for many, many people. No more for-pay mobile service, and no more for-pay land lines.

Next: The gPhone could be the ideal second phone for busy people like Realtors. I’ve thought for a while that I might end up with a BlueTooth headset on each ear. Imagine making all of your showing calls from the gPhone. Now you can ignore your main phone with clients — which I think is good marketing — but you will know to take the gPhone calls, since they will have the access information you need. You could also stage intra-skullular conference calls, which probably is more amusing in concept than in reality.

Moreover: You could use the gPhone as the mobile analogue to your Yahoo mail account: A throwaway that you will throw away when the spam gets out of control.

There is an argument that people don’t respect things they get for free. That may not be true, or it may be progressively less true, but it remains that we treat free resources very differently Read more

September 3, 2007

The Odysseus Medal: “Government was never intended to bail out corporations”

by

Suburban Phoenix Real Estate Broker

Author website

I was at a party Saturday night, and everyone kept telling that it’s a great time to buy. I’ve been showing all weekend, so, who knows?, maybe it’s true. In any case, I’m short on minutes, so we’ll do this week’s awards on horseback.

The Minnesota Association of Realtors has a peculiar talent for inviting scorn and ridicule. This year’s fun-fest, the winner of our People’s Choice Award, was kicked off by Teresa Boardman, with Has MAR forgotten who pays the bills?

I would love it if half of the agents in the twin cities quit. That would mean more money and more business for me. It just doesn’t work that way and it never will. When it gets easy everyone wants to do it, and they do. When the going gets rough they quit.

Glen, your letter is just another example of how an industry in turmoil has started eating it’s young to protect old business models instead of innovating to better serve the consumer. Real estate is a self eliminating market driven profession. It works on the principals of supply and demand, as does the housing market.  When agents can’t make ends meet they will seek employment outside the industry and maybe they will sell a few homes too. We call our economic system capitalism and I just love the almost endless opportunities the system brings. Anyone can start their own business, how cool is that? 

You don’t get to decide who will stay and who will go based on earnings and years in the business. Each of us will make that decision on our own.

The Black Pearl Award this week goes to Morgan Brown’s Taking advantage of convertible home equity lines of credit, which teaches us how to encumber a Jumbo-priced property without a Jumbo loan:

Instead of taking the whole loan balance as a 1st position HELOC, take a conforming 1st mortgage up to $417,000 and then take the remaining as a convertible HELOC. Once you sign the loan documents you can convert the HELOC to a fixed rate and achieve a blended interest rate (the effective interest rate of Read more

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Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

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