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September 4, 2006

Remarks from Redfin.com Broker Glenn Kelman . . .

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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 4, 2006

A note from the Swan of Avon about Rain City Guide . . .

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Suburban Phoenix Real Estate Broker

Author website

The rain it raineth every day — but one.

When that I was and a little tiny boy,
With a hey, ho, the wind and the rain,
A foolish thing was but a toy,
For the rain it raineth every day.

But when I came to man’s estate,
With a hey, ho, the wind and the rain,
Against knaves and thieves men shut their gate,
For the rain it raineth every day.

But when I came, alas, to wive,
With a hey, ho, the wind and the rain,
By swaggering could I never thrive,
For the rain it raineth every day.

But when I came unto my beds,
With a hey, ho, the wind and the rain,
With toss-pots still had drunken heads,
For the rain it raineth every day.

A great while ago the world begun,
With a hey, ho, the wind and the rain,
But that’s all one, my song is done,
And I’ll strive to please you every day.

The world has begun again…

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September 3, 2006

Note from Dustin Luther regarding the hacking of Rain City Guide . . .

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Suburban Phoenix Real Estate Broker

Author website

Quoting:

Of course it happens when I’m whitewater river rafting! Definitely teaches me a lesson!!!

This was the first I’ve been away from the internet for more than a few hours in over a year!!! LOL!

I’ll try to fix it in the morning, but I’m too beat right now.

Thanks to everyone for letting me know the site was down!

Best,

-Dustin

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September 3, 2006

If Bill Clinton ran Redfin.com . . .

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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 . . .

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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

September 2, 2006

Peter Pan at the CD rack: Apprehending the art in pop music . . .

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Suburban Phoenix Real Estate Broker

Author website

I wrote this almost three years ago, reflecting back on Labor Day 2003. I happened to think of it this week when I heard a piece of Bob Dylan’s new album. With a few truly remarkable exceptions, a couple of which are discussed here, Dylan has been phoning it in since he met Andy Warhol — who taught him that pigs will eat anything. And, yes, I’m off-topic again. And, no, I don’t know if I’ll do something like this every week. But this post dips at least one toe into the depths of depth, so it’s entirely possibly that you will emerge from this experience enriched, edified — or at least, I can hope, entertained.

Peter Pan at the CD rack…

It doesn’t matter what I say
So long as I sing with inflection
That makes you feel that I’ll convey
Some inner truth of vast reflection
But I’ve said nothing so far
And I can keep it up for as long as it takes
And it don’t matter who you are
If I’m doing my job then it’s your resolve that breaks

I’ve been thinking a lot about The Blues, which literally means the endlessly replicated, superficially variegated, ultimately massively redundantly meaningless Blues that was the focus of the Scorcese documania.

I said something stupid
Then I went and said it twice
Lord, I said something truly stupid
Didn’t I go off and say it twice?
I sold you the same old thing again
And suckered you in to paying full price
(I suckered you in to paying full price)

And that’s okay, really, because it’s stupid and useless and wrong, and just exactly as valuable as the paleolithic pottery people go ape over — for exactly the same reasons. The Blues is a primitive non-art made by people who had nothing to make art from — no instruments, no training, and no real talent except for a knack for hustling suckers. And that’s why this is such a wonderful work of art:

Because the hook brings you back
I ain’t tellin’ you no lie
The hook brings you back
On that you can rely

There is something amiss
I am being insincere
In fact I don’t mean any of this
Still my confession draws Read more

September 1, 2006

You might think it’s just real estate, you might think it’s just work, but this Labor Day we’re celebrating three labors of love . . .

by

Realtor, Staging Consultant

Author website

Labor Day is a day ostensibly set aside in our nation’s calendar to celebrate America’s workers by… taking off work. This has never made sense to me. Fortunately, Greg is of like mind, and so we celebrate Labor Day by working! We truly love our work, and this year, this week I am blessed with so many reasons to rejoice in the work we do.

I met Jurij and Tatiania in June 2005, as the madly escalating Phoenix housing market was racing through its two-year crescendo. I was representing buyers who were relocating to Phoenix, previewing houses for them, and Jurij and Tatiania were selling a house that had been, at the time, listed for about two months in a market where houses were looking long in the tooth after only two weeks. I was really green in this business last summer, so I couldn’t figure out why their charming house wasn’t moving… and it had already been through two price reductions, when everyone else’s houses were selling for more than asking price.

I ended up finding my clients a house that was much better suited for them, a beautiful old Craftsman bungalow that they are still thrilled about and which should eventually be very profitable for them when the time comes for them to move on. But before we found that one, my clients had me returning to Jurij’s and Tatiania’s house again and again to explore that possibility. Jurij was usually at home when I got there, and during my several visits to photograph and measure his house and yard, we formed a bond over our love of dogs. He has a wonderful, playful old Yellow Lab, Jake, who became my fast friend, and Jurij loved my business card, on which a photograph of our Bloodhound, Odysseus, is prominent where other Realtors typically have glamour shots of themselves.

Jurij and Tatiania’s home languished during last summer’s sizzling market, and then went through another, different, unsuccessful listing… both times, I now understand, without ever having been conscientiously represented, without ever having been actually marketed. At the expiration of their second unsuccessful Read more

September 1, 2006

The custom web site we built to sell your home might not Google well — but it doesn’t have to . . .

by

Suburban Phoenix Real Estate Broker

Author website

Free the Drones, a saving and investing weblog I read every day, has a post today discussing our practice of building a custom web site for every home we list. I’m thinking that I should write on that one topic at length, because the strategy is more intricate than it might seem at first glance. For now, I want to address the caveats raised by Free the Drones:

When I searched for 1102 West Culver St in Google, the website doesn’t come up in the top 50. In fact, the Bloodhound Realty Blog only comes up at number ten with a mention of the street address in the text. What’s the deal?

The problem is the word “St”, which Google might just as well throw away. Search these three for contrast.

It might be the Google Sandbox

I don’t think there is one. If there is, the penalty is measured in days, not months.

It would be a lot better for [that page’s title] to be “1102 West Culver St., Phoenix, AZ”

Absolutely right. We do it that way now. (This site was built in January.) We do each page within the site with the headline from that page, as well.

What would I do instead? I’d have a subpage about the house on the main Bloodhound Realty site, buy the domain “http://www.1101westculverst.com,” and then do a 301 Redirect, which is a way of sending anyone who types in that web site to the subpage you created. That way you can advertise the house as having its own site, and anyone who tries to go to it will be sent automatically to the place on your site that’s about the house.

This might make sense if you were selling your own home, and if you only had one page of content. We are building canonical web sites about the homes we sell. One of their very important purposes is to capture the listing for that one home again and again, every time it sells.

The caveat is that you’re going to have to do your own advertising – getting people to know about your site through something like Google is Read more

September 1, 2006

Escape clause would help all

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Suburban Phoenix Real Estate Broker

Author website

This is me in today’s Republic (permanent link), another chance at infamy:

Escape clause would help all

Believe it or not, this can be a rabble-rousing column.

Sometimes I write about the perils of dual agency or why the buyer is actually paying for everything in a real estate transaction or why buyers as well as sellers should negotiate their agent’s compensation. While these ideas might seem simple and obvious to you, in fact they are hugely controversial within the real estate industry.

When I write a column like that, my day will be punctuated by testy calls from angry Realtors and brokers.

Oh, well.

The slim justification for our real estate licenses, and the earning power accruing thereto, is service in the public’s interest.

Too much of “the way things have always been done” in real estate strikes me as being of great benefit to the brokers and the agents, but of no benefit – or even of actual harm – to buyers and sellers.

Here’s another one, sure to make the phone lines light up:

There should be a firing clause in every employment agreement.

Brokers want employment agreements because we work “on spec.” That is, we don’t get paid until we produce the agreed-upon results.

That’s a good thing. It keeps Realtors motivated.

But an exclusive employment agreement with no exit clause traps unhappy buyers and sellers with an agent who may not be producing any results or who simply may not be a good fit personally.

This is language that will suffice:

“This agreement will be terminated upon written notice by either party.”

With this clause, the broker can fire the clients, too, if that seems wise. But the important point is that clients can get out of an unhappy situation if they feel this is necessary.

Their goal, as buyers or sellers, is to achieve their real estate objectives. Buyers and sellers are not buying and selling real estate for the benefit of Realtors or brokers.

Giving consumers the power to escape an employment agreement when things just aren’t working out is the best service of their interests.

I am much constrained by the space limits of the newspaper. I wrote here on the Read more

August 31, 2006

Zindicated! Is this Zillowed seller proof of the need for even greater Zillification?

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Suburban Phoenix Real Estate Broker

Author website

Frankly, no.

Christine at NY Houses 4 Sale cites a Realty Times article about a seller who immediately pulled his home off the market after a prospective buyer confronted him with a Zestimate $500,000 below his assessed value. His conclusion is that Zillow.com has made his home unmarketable.

My first reaction is simply to say, “Hysterical much?”

I think Zillow.com misleads consumers by implying that its Automated Valuation Method is a valid and useful way of pricing homes, but I can’t believe that there is any report or document produced by Zillow.com that cannot be completely dispensed with by saying, “Are you utterly daft? If you can buy a house in this neighborhood for half-a-million under market, I’ll help you move in. Now get serious or get lost.” On my planet we call that negotiation.

At NY Houses for Sale, Christine writes:

I am sure that soon there will be more and more complaints and I am also sure that as the market continues to change more and more buyers will be “Zillowing” their neighbor, mothers, brothers, sisters and friends houses. Just as I am sure of those things – I am VERY sure that there will be many buyers coming into homes that are listed claiming that they are over priced. But here is my answer.. “The house is NOT over priced – your Zestimate is UNDER priced”.

And all that will be great. Zillow.com wears a media-conferred halo right now. The more people talk about the incredible, obvious, bone-headed mistakes Zillow cannot help but make, the less people will rely on it — or affect to rely on it. At some point Zillow may elect to tell the truth in no uncertain terms about what an AVM can and cannot do — in order to retain at least a shred of credibility.

But as for this seller: Grow up, cowboy. If there were no Zestimates, the buyer would have tried a different lowball tactic. If you want your house to sell, pay $300 for a spot appraisal, price you home at or below it, and leave a copy of the full appraisal report Read more

August 31, 2006

Disintermediation? Defenestration? It’s all good . . .

by

Suburban Phoenix Real Estate Broker

Author website

If, like me, you are stuck using Windows because dipsh*t developers write websites that are Microsoft Internet Explorer only — such as the Arizona Regional Multiple Listing Service’s Tempo system — rejoice in the arrival of Crossover for the Macintosh. It’s a WINE environment that permits you to run a single MS app within your OS-X operating system. Intel Macs only, obviously, and if you need more from the Windows world (poor blighter), you’ll still have to run Parallels or BootCamp. But if you are only one app away from ridding yourself of Windows, hold up your hand and wave bye-bye.

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