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Category: Disintermediation (page 32 of 43)

January 12, 2007

Russ & Russell?

by

Mega-Producing Realtor

Author website

In response to this post, Russ Cofano (of Rain City Guide fame) wrote:

“For a division of the United States government to allege some sort of Realtor price fixing in an industry that is so overloaded (sic) with competition that it almost defies belief IS breading hate and contempt.”

In the present suit against NAR, the DOJ is not alleging price fixing. They are alleging a violation of federal anti-trust laws because of anti-competitive policies that allegedly make it more difficult for non-traditional brokers to “play”, harm consumer choice and stifle innovation. Russ

Thank you for the correction, Russ. There may also be other false impressions for me on this issue. I would be very interested in having someone who is extremely articulate and well informed (like you, for example!) explain why the DOJ may be right to go after the NAR on this point. I’m all for a level playing field for anyone who wants to play. But aren’t the “anti-competitive policies” basically who has the right to decide how and where listings will be displayed?

If you’re game – either send anything you want to post to me or just put it in the comments section and I’ll get an email notice from BloodhoundBlog. It would be a LOT more fun than the agency smackdown.

I would rather have a mind opened by wonder than one closed by belief.

– Gerry Spence

January 10, 2007

Community Choice in Real Estate

by

Mega-Producing Realtor

Author website

“Interested” wrote:

What would be the disadvantage of listing a home with a Realtor who charges a flat fee based on services provided?

Brian Brady responded:

I’d like to take stab at this question:

It’s economics. There is a school of thought that suggests that Realtors are clerks; some are. It has been my experience (as a Lender working with Realtors) that you really do pay for pricing expertise when you hire a Realtor. If you hire a Realtor for a flat fee, it may remove the incentive she may have to negotiate upwards.

I have been a fan of incentive-based compensation that would actually raise the net fee to the Realtor if pricing and timing points were met.
http://activerain.com/blogsview/22686/Pay-For-Performance-A

If you’re selling your home to your cousin, you don’t really need a Realtor; you could hire a real estate attorney to insure that the state disclosures have been met, and contracts are compliant with state laws. Just accept the fact that you really didn’t try to get the “best price”.

There really is only one way to get accurate pricing and that is from a Realtor who knows the local market.

I liked Brian’s response so much I posted it here – instead of leaving it in the comments section.

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Then “allen greenspan” wrote:

So let me get it right. If I don’t believe realtors are worth 30k + to sell my home, and if I sell my home myself (like I have several times) then I am making the world a bad place? Do I follow your logic? Saving myself 30k dollars = breeding hate and contempt.In that long list of tasks you do for your clients can be done by anyone with an ink jet printer and a telephone number of an escrow agent. But we don’t want the public to know that! Why does the Justice Department say that NAR is the last Cartel? their words not mine, is the justice department breeding hate or breaking up a cartel?

Yes. The Justice Department (along with the FTC) IS breeding hate. That is exactly what they are doing. I really don’t give a crap who you list your home with Read more

January 9, 2007

Feed the starving Realty.bot: Zillow.com is underwhelming, so far, as a National Property Listings Service . . .

by

Suburban Phoenix Real Estate Broker

Author website

I think I have to back off — for now, at least — from my earlier expectations for Zillow.com as an incipient National Property Listings Service. To this date, anyway, Zillow’s appeal to sellers and listing agents has been underwhelming, at best. As I write, there are 19,250 homes listed for sale on the system. An additional 10,381 are listed under the “Make Me Move” option. By contrast, at the time that Zillow.com released these changes to its software, Trulia.com announced that it had achieved one million on-line listings.

At that time, I had written Trulia and other on-line listings aggregators off as dinosaurs, and I still believe this is true. But if Zillow.com represents the coming of the mammals, the first mammalian species to have evolved must have been the sloth.

What’s the problem?

No XML feed.

When these software upgrades were made, Galen Ward speculated that Zillow had skipped the feed to capture agents’ eyeballs for its advertising. If this is the actual reason Zillow elected not to permit listing by XML feed — as is done by the other Realty.bot listings aggregators — then the strategy has backfired.

Whatever Zillow’s reason not to have a feed, that reason is wrong. In making these changes, Zillow.com voluntarily surrendered the fearsome mojo of it’s Delphic Automated Valuation Method. Overnight, it transformed itself from every Realtor’s favorite bette noir to… just another listings bot. And as exciting as it might be as a listings bot, it’s but one more of what are already too many listings bots — and the only one of the bunch that can’t be fed from PostLets or vFlyer or one of many proprietary Realtor web site vendors.

That is: It went from being potentially threatening to Realtors but fundamentally useless to potentially useful but fundamentally a pain in the ass to Realtors.

This turns out not to have been an improvement, especially as Zillow.com prepares to roll out an advertising product targeted to Realtors. Zillow.com has always been able to deliver potential sellers — even as it delivers wildly inaccurate Zestimates to them. But without a significant number of homes listed for sale, Read more

January 8, 2007

Hey, buddy . . . Wanna buy a Zip Code . . . ?

by

Suburban Phoenix Real Estate Broker

Author website

Eppraisal.com and Zillow.com today both announced Zip Code based advertising programs to allow agents to display ads to people searching in their particular farm areas.

Under the Eppraisal.com plan, agents will sponsor particular Zip Codes for a fee of $20 a month.

If you are a real estate professional, you can sponsor any zip code in America and begin connecting with the eppraisal.com users who are eager to understand how much their castle is worth. You’ll be exposed to consumers who are ready to take action on buying, selling or re-financing a home. By sponsoring a zip code, or multiple zip codes, you gain exclusive access to users within the area as well as premium advertising opportunities to those targeted zones for only $20 per month.

Zillow’s plans are not as definite at this point:

Today at Real Estate Connect NY, Zillow president Lloyd Frink talked about a new advertising product coming during the first quarter of this year, one that allows agents and other real individual estate professionals to buy inexpensive, targeted advertising on the site.

We’re calling it EZAds — and it’s pretty simple — an easy, online way for individual agents and other real estate professionals to buy and customize ads on Zillow.com, targeted to specific searched ZIP codes. The ads show up on ZIP code-specific areas throughout the site, including map pages and home detail pages.

No word on pricing, nor availability.

Curiously, neither site elected to follow the Realtor.com business model of selling outrageously large farming areas to multiple, competing agents…

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January 3, 2007

ShackPrices.com takes on the big fish from a lofty perch . . .

by

Suburban Phoenix Real Estate Broker

Author website

ShackPrices.com hits the big time at InmanNews (free for now):

The latest real estate site to trace its roots to this rainy city is ShackPrices.com, which plots home listings in the Seattle area and western Washington state on Google maps.

ShackPrices.com went live a few weeks ago, and joins a growing list of sites aiming to simplify the hunt for real estate. Its founder, Galen Ward, has a technical background in mapping and databases and is a contributor to the Rain City Guide real estate blog.

Other real estate search sites vying for consumer attention include Trulia, HomePages.com, Realtor.com and the many broker-operated sites that also include listings.

“Our goal at the site is to make the process of finding and buying a home easier for consumers,” Ward said. Unlike some real estate search sites, ShackPrices is a member of the multiple listing service, which enables it to display a more comprehensive list of local properties for sale than a site operated by a nonmember.

The site enables consumers to enter home-search criteria from the homepage, and also features “Suggested Shacks” — homes that buyers might be interested in viewing based on their criteria and a proprietary algorithm.

Ward notes the importance of “all the niche decisions that go into buying a home” like neighborhood information that he felt were lacking in many existing real estate sites.

“When I started making maps and working in spatial databases four to five years ago, it occurred to me one day that the world is really lacking in info about what’s nearby a house. You could look up the price and size and stats on a house, but it was really lacking on the context of what the neighborhood was like, how close it is to amenities, what the views are,” he said.

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December 29, 2006

BloodhoundBlog at six months: Getting our legs under us . . .

by

Suburban Phoenix Real Estate Broker

Author website

BloodhoundBlog is six month’s old today. The first post, an accidental prophesy, was about the incipient disintermediation of for-pay content providers in the age of the internet:

If almost-as-good is free or nearly free, what is the market value of slightly-better?

I documented the birth of the blog soon thereafter, but it’s reasonable to argue that BloodhoundBlog is a natural progression in the erosion of the castle walls surrounding for-pay intellectual property. When Joseph Rago rails that weblogs are “written by fools to be read by imbeciles,” by what sum, precisely, is the Wall Street Journal enriched? Is it plausible that more wealth was “monetized” in the Rago-reaction than ever was realized by the original rant? If “no man but a blockhead ever wrote, except for money,” who made more — Rago or the anti-Ragoons? And what persists, in the end, but another “free” opinion in an unmetered atmosphere of “free” opinions?

Their world is done. Ours is but begun. There may be a way to build a wall around original reporting, particularly where the information is time-sensitive, is difficult to obtain or is available only from an easily-restricted source. The obvious example is a real-time — as against time-delayed — stock ticker. What’s left after that? Habit? Status? Higher production quality — which may be a further expression of status? What argument can the vestigial Joseph Ragos make for the added value of “metered” air? It’s time for a deep breath, isn’t it? Why not? The air is “free.”

Do you want to argue for the superiority of your content? Good on ya! Produce superior content. Is it your goal to argue that your content is so much better that you deserve to be paid for it? Good luck with that plan. You may be able to draw enough eyes that you can dupe some advertisers into paying for the chance to try to hook a few — just like the endlessly preening broadcast news. If you see your future in a box office — a toll booth on the information superhighway — then do, please, take that deep breath. There’s a clue Read more

December 28, 2006

Consumer Federation of America – Controlled by Big Banks?

by

Mega-Producing Realtor

Author website

A somewhat remarkable report has been released by the Consumer Federation of America. I first read about it on Inman News and wondered who they were. Was this just another front group (obviously bought and paid for by big banking) like the American Homeowners Grass Roots Alliance? I also first ran across that group on Inman – Inman will almost always find any letter written by Bruce Hahn, the President of the American Homeowners Grass Roots Alliance, worth publishing. As Hahn is so obviously getting funding from some organization with pretty deep pockets, it was easy to spot him and his organization as a front for someone with an agenda they would prefer be kept hidden. I don’t actually know it is Bank of America but, for sure, it is big banking that keeps Mr. Hahn’s “alliance” afloat.

So I am expecting to find something similar when I read about the report issued a couple of weeks ago by the Consumer Federation of America. Surprise, surprise – they really are a “federation” and they really do have lots of links that have nothing to do with real estate sales being regulated by the federal government. For anyone who would like to wade through the entire report from the CFA here is a PDF of it.

For anyone who would care to read excellent expert analysis of the report and the overall “flow” that is coming from the CFA – there are two articles by Blanche Evans that I think are well worth spending the time they will take to read. I read her most recent one first, it was first published December 12. Then the one she wrote on July 25 of this year.

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I would also like to extend a warm welcome to our newest member, Brian Brady. I was surprised (and pleased) to see you on BloodhoundBlog, as I had just found you (on your blog) a couple of weeks ago and really liked what I saw. Also, I just have to commend our “Top Blogger” on BloodhoundBlog (she is the first one on the list). I vote that if any new Read more

December 22, 2006

Cutting out middle man in a sale might cost you

by

Suburban Phoenix Real Estate Broker

Author website

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

 
Cutting out middle man in a sale might cost you

I’ve talked about disintermediation before, and surely it will come up again. Disintermediation in real estate is the idea that buyers and sellers can eliminate the middle man — in this case the Realtors — and deal with each other directly.

The belief is that the Internet will provide information formerly “hoarded” by Realtors so that real estate transactions will become as simple as buying stocks or airline tickets online.

The information that is supposed to make this happen is the Multiple Listing Service, and that’s something we can talk about another day. For now it is sufficient to make plain that MLS listings are very far from being the most important information in the sale of a home. The simple fact is that, because I do this job every day, I can do a much better job than an unrepresented buyer or seller, much as you can do your job better than I could.

Want proof? Let’s go buy a house.

We’re out showing homes with our party and they settle on one they like. Because it’s a buyer’s market, and because the buyers aren’t very well prepared, we don’t write a contract right away.

What’s the best day to write an offer? Tuesday, in principle, but the absolute best day is the first Tuesday after the first of the month. The buyers have never given this a second thought, but it’s our job to know.

We’ll send the buyers to a lender we know and trust. Why? Because, although they have good credit and good incomes, they have no cash. Our lender can write a fast 80/20 loan with very low closing costs. Say what? That’s an 80 percent first mortgage, a 20 percent second mortgage with no private mortgage insurance — all without costly junk fees.

When we finally write the offer, we’ll recommend a structure like this: List price, less 5 percent, with an additional 3 percent coming back to the buyers as closing costs.

Are we done yet? Not even close, but we’re done for now. Come Read more

December 21, 2006

Ooh, baby, baby it’s a wired world — but what is going to change in residential real estate in the next 12 months? Almost nothing . . .

by

Suburban Phoenix Real Estate Broker

Author website

One of my clients gave me a wake-up call late this year. She has a computer, but she’s never unpacked it in her current home. I don’t know if the computer is robust enough for broadband, but it really doesn’t matter, does it? I’ve been ferrying listings to her by car — printed on paper, stuffed in envelopes and parked under her doormat. Just lately she acquired a fax machine, which is convenient. We have a house under contract and there is a lot of paper flowing back and forth. Certain oil-rich sheikdoms might weep, but everyone else can breathe freely — and from a cleaner air supply.

This is a weird world for a wired Realtor, but guess what? It’s the real world. My own sweet mother is such a Luddite that we’re buying her the dumbest dumb terminal I have ever seen for Christmas. We started out saying, “When all you have is a hammer, everything looks like a nail.” By this point, we act as though we believe that everything is a nail.

This is incorrect.

For one thing, buyers and sellers of residential real estate are not on-line in concentrations greater than other demographics. How could they be? Young people, yes. Technophiles, yes. Everyone else…? Not so much.

Moreover, whether or not buyers and sellers are poking around on-line, for the most part they are not making life-altering financial decisions in untouched-by-human-hands on-line real estate transactions. There might be a news story about a crazy young couple taking the plunge, but you need to stop for a moment to recall that that exact page of the newspaper only just last week was devoted to a young man who has never cut his toenails. What makes news? The exception, not the rule.

We are too much misled. The exception is interesting, but it’s interesting because it’s rare. We ignore the commonplace because… well, it’s commonplace. In the last year, we saw the launches of dozens of new Realty.bots, each one devised to provide easier access to information that was, for the most part, already available. What changed in actual, on-the-ground residential real estate Read more

December 15, 2006

Almost famous: BusinessWeek on excessive buyer’s agent’s commissions . . .

by

Suburban Phoenix Real Estate Broker

Author website

Eagle-eyed Kevin Boer of Three Oceans Real Estate was the first to catch it: BusinessWeek.com quoted me in an article on “supersized commissions”:

There’s nothing wrong with incentives, even sizable ones, if they’re disclosed and buyers fully understand what’s motivating the agents who are showing them around. But in many states disclosure is poor or inconsistent. In Arizona, for example, brokers who show houses are encouraged to sign agreements specifying how they’re compensated. But the agreements aren’t required.

THE SKY’S THE LIMIT

Also, they can be signed after someone has already fallen in love with a home and isn’t looking at the fine print. And the compensation can be explained as generally as, “3% and up,” meaning the sky’s the limit. Add it all up, and, “I don’t have to disclose to you how much I’m getting paid,” says Realtor Greg Swann, the designated broker of BloodhoundRealty.com in Phoenix, who says he voluntarily imposes stricter rules on his own agents. By offering extra-high commissions without informing customers, he says, “the builders are trying to bribe me to sell their houses.”

That whole section of the articles relies on BloodhoundBlog contributions: Contributor Doug Quance and frequent commenter Dave Barnes both kicked in examples that were used in the article, but, alas, they were not mentioned by name.

BusinessWeek Economics Editor Peter Coy first called me about last week’s Zillow.com news, and we talked in very broad terms about Realty.bots, disintermediation, the valued-added services a good Realtor brings to the table and commission structures in general. We’ve covered a lot of that here, so I sent him quite a few posts from our archives.

The implication of the article is that buyer’s agent’s incentives are the rule rather than the exception, but, even so, I don’t think it is a bad idea to caution buyers about the risks:

Advice to consumers: Start with the assumption that the nice person showing you around is not your ally. Ask up front how much the person would be compensated if you bought a place. If possible, sign a buyer-broker agreement before you start looking at houses. This guarantees that the agent is working Read more

December 15, 2006

Web sites offer exciting options

by

Suburban Phoenix Real Estate Broker

Author website

This is me in today’s Arizona Republic (permanent link). Sadly, this is news. In other words, this is the first mention of the Zillow.com upgrades in the Republic.

Web sites offer exciting options

Depending on whom you talk to, the real estate industry is undergoing a revolutionary change – or is not.

The “Realty.bots” arrived in force in 2006, national Web sites offering free home evaluations or free for-sale listings for homeowners.

Some Realtors and consumers view these as harbingers of great change. Others yawn and dismiss them as gimmicks.

Zillow.com, one of the biggest of the Realty.bots, just upped the stakes with an upgrade that will add the following new functionality:

  • Owners or listing agents for any of the 67 million homes in Zillow’s database will be able to list those homes for sale at no cost.
  • Owners will be able to post a “Make Me Move” price on their homes, the price at which all objections to selling will have been overcome.
  • Zillow is creating a real estate “wiki” to serve as a sort of Wikipedia.org-like encyclopedia of real estate.

The wiki — a user-built and maintained encyclopedia — is a nice idea that may grow into something great in time.

The Make Me Move feature seems like a gimmick right now, although it may turn into a vibrant clearinghouse for homes.

But the big news is that owners and Realtors will be able to list their homes on a site that already draws around 3.2 million visitors a month.

On the one hand, that number is huge. It rivals Realtor.com, the 900-pound gorilla of real estate Web sites.

On the other hand, it could be a big yawn: Millions upon millions of homeowners and buyers are not going to Zillow.com or to any real estate sites.

Surely this will change over the long run, and Zillow is positioning itself to be the one-stop-shopping national real estate Web site. This bodes ill for Realtor.com and all of the other Realty.bots.

Real estate is local, not national, and a real estate transaction involves hundreds of intricate details for which expert advice is essential.

So what does all this mean for consumers and Realtors? Time will Read more

December 13, 2006

David versus Goliath: Rolling out a brand-new map-based search portal when everyone is looking the other way . . .

by

Suburban Phoenix Real Estate Broker

Author website

The universe of map-based listings portals was upended last week with the announcement that Zillow.com was coming into the game, along with 58 million of its little green friends. Whatever long-term effects this might have, the short-term consequence has been a deafening silence from all directions. We haven’t even heard the blustering ‘guy talk’ one might expect in these circumstances (“Two legs?! Only losers need two legs!”).

But there is in fact a place even harder than the hard place the Realty.bots found themselves in last week: Imagine being on the verge of rolling out your brand new map-based listings portal when Zillow made its announcement.

This is the predicament Galen Ward and Doug Cole found themselves in last week as they prepared to go live with ShackPrices.com, a brand new listings portal based in and (for now) devoted to Washington state.

Here’s the company’s official press announcement:

ShackPrices.com is a snappy Google maps-based real estate search site that makes finding a home better by augmenting each real estate listing with data about what is nearby, including the distances to nearby landmarks, nearby schools and nearby bus stops. ShackPrices also helps home buyers learn about cities and neighborhoods through links to reviews, statistics and photos.

We cover all of Washington State right now and we plan to expand to other states in the coming year. As part of our mission to make finding and buying real estate easier and better, we will be introducing a service to help home buyers find the best local real estate agents in the coming year.

Readers here will know Galen Ward from his contributions to Rain City Guide. And the site is everything we would expect from Galen, fast and robust, esthetically beautiful and rich in practical details. The fit and finish is beyond excellent, in stark contrast to Zillow’s offering, and the extra features — neighborhood details, nearby amenities, etc. — are the best I’ve ever seen.

The site draws upon MLS listings, so the inventory is very large from day one. The browser window is tab-based for maximum information density with a minimum of confusion. The underlying AJAX programming makes Read more

December 13, 2006

Making Predictions, Cowards & Lies

by

Mega-Producing Realtor

Author website

“Mike” writes:

A lot of the current level of vilification is because of people like David Lereah, ostensibly the public voice of all realtors in the US, who is now perceived by many as somewhere between a buffoon and a baldfaced liar.


The man simply cannot tell the truth and every monthly and quarterly revision the NAR issues highlights that problem.

You are correct about one thing: David Lereah is often wrong in some of his predictions. I don’t think he is the only economist who makes non-stop predictions (that are published and posted on the internet) who is wrong on some of his pronouncements. In fact, he has a lot of company. To my knowledge almost every economist who makes predictions about the direction of “the market” is often wrong – it just goes with the territory. In all of history there is NO person who consistently always accurately predicted the future of any financial market (real estate, bonds, stocks, art, etc).

This is also true for people who – on a daily basis – predict the weather. They are often wrong. But most people don’t tend to characterize the meteorologist who said, “No rain this weekend” as a baldfaced liar. Most people seem to understand that anybody who makes predictions all the time will not be right all the time. Unlike you (and the other gleeful I-hate-everything-about-NAR-and-all-Realtors), David Lereah actually uses his real name when he makes a prediction – and his past predictions are readily available for anyone to compare with the actual statistics that did occur. Based on the fact that Mr. Lereah uses his own name – just this one point – makes anything he might have to say FAR more credible than anything you (or any of the other nameless and spineless cowards who anonymously snipe) might have to say. I have NO respect for the opinion of someone who is too spineless to even use a real email address.

How about YOU bother to do some real research yourself before you call someone a liar? How about posting specific statements made by Lereah and the specifics Read more

December 12, 2006

Who needs Realtors . . . ?

by

Suburban Phoenix Real Estate Broker

Author website

I was talking with a reporter yesterday about the idea of disintermediation in real estate. I brought up the question of what is the ideal closing date, just as a quick and dirty illustration of why buyers and sellers need professional advice, even if they think they don’t. This morning’s Ask the Broker question provides more examples.

Here’s another one:

Cathy has a house closing on Friday. She’s the lister (sold in 21 days!) and the buyer came in without a contingency on the sale of another home (yay!). But: They live out of state right now and they have an out-of-state lender (boo!).

The sellers are buying their next nome in Boise, and that transaction is contingent on the sale of their home in Arizona.

Without discussing this with either Cathy or with their buyer’s agent in Boise, the sellers scheduled their closing in Boise for — guess when? — Friday.

They scheduled their movers to deliver their stuff to their new home in Boise on — guess what day? — Friday.

Now god loves the uninitiated in real estate transactions, and he graces them with the unshakable faith that things always work perfectly, as and when planned.

Especially with out of state buyers.

Especially with out of state lenders.

Especially with contingent sales.

Most especially with simultaneous closings — in two different states.

Consider the disclosure chain: The out of state lender to the Arizona buyer’s agent to Cathy to the Boise buyer’s agent to the Boise seller’s agent, with Cathy also keeping the lender on the Boise property (our favorite lender, Logan Hall of SallieMae Home Loans) in the loop, and with each Realtor and each lender keeping their respective clients up to date. Every new development has to traverse this chain. Everyone is on good terms, and they’re all pulling in the same direction against the forces of inertia and Murphy’s Immutable Laws.

So: Who needs a freakin’ Realtor, anyway? The MLS wants to be free! Once that happens, we can push the middlemen (count them in the previous paragraph) off to the side, and real estate will change hands just as easily as securities, airline tickets and cheesy 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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