Category: Disintermediation (page 35 of 43)

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

The Future of Real Estate Marketing rolled its own Google-based real estate search tool, as did BlueRoof.com. I think these are really sweet ideas about which I intend to do nothing, but I would gleefully hit a tip jar if someone were to set up a canonical real estate search on its own domain or on a third.level.domain on an existing site. Make it integrable and I’ll integrate it with credit into my sidebar. All the big-boy tools (Technorati, blogsearch) kinda suck, so a mission-critical real estate info search tool is a solid win.

I cited the Maverick entry at Mike’s Corner the other day, but I want to link back to it again. I think this is Serious Business, and it hasn’t gotten the hashing out it deserves. Daniel Rothamel from The Real Estate Zebra has a particularly insightful comment.

More from Three Oceans Real Estate — Electronic signatures: what are you waiting for? I’m on the lo-tech end of this, for now. I’m told it’s potentially legal in Arizona, but I haven’t dug through the nitty-gritty details.

Bonnie Erickson drew my attention to a post she put up on Active Rain in September: In changing from sub-agency to to buyer’s agency did with throw out the baby and keep the bath-water?

At 360Digest, Marlow Harris has a very thorough run-down on the relo racket.

RSS pieces (blogrolled) offers the “Top 5 secrets of successful blogs. I happened to hear from Jennifer Dizmang, who taught a class I took just lately on using self-directed retirement account to invest in real estate. That rocks, yes? Jennifer knows a whale of a lot of other stuff, too, all worth millions. Guess what she doesn’t know? Yup. She’s a blog-o-novice. She wants to take flight, but here wings aren’t ready. I sent her the RSS pieces piece, but if y’all have other ideas for her, you might send them along.

Hotpads.com wants you to know that it is courting controversy with electoral heat maps.

The XBroker (blogrolled) craves attention — but he earns it. This is a tearing back of the veils, and it’s kind of roughshod, even rapine, but Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

I’m juggling stuff, so I’m going to try to sneak in some little things fast. There’s a lot of great stuff out there…

Pat Kitano at TransparentRE has a nice scary story for Halloween: The disintermediation of the bond traders.

Alive with numbers, Kevin Boer at Three Oceans Real Estate takes two spins of the Altos Research wheel and also calculates the financial clout of Zillow.com’s demographic.

Bonnie Erickson at Real Estate Snippets has nice advice on IRS Section 1031 tax-deferred exchanges and some sage tips for new real estate agents. Bonnie is in Minnesota, where new agents are more officiously advised to fall on their swords.

More later. Gotta race…

Technorati Tags: blogging, disintermediation, real estate marketing

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Broker Bryant’s comment below put me in mind of a business model I invented earlier this year.

I spent my second two years in real estate in a brokerage such as Bryant describes: You pay a monthly fee to hang your license. If you produce — not encouraged — you pay a transaction fee plus an Errors and Omissions insurance premium. There were 185 agents in the brokerage, of which maybe 15 of us were doing more than one transaction a year. I was doing a lot more. I was there because it was the cheapest 100% plan available to me, because I knew they would leave me alone — which they did — and because I was biding my time until I could take the test for my broker’s license.

But it occurred to me that the NAR has got got be about one-third dead weight by now: Agents with style, charm and zeal — just no clients. Even so, an active real estate license is a valuable thing to have, even if you really are doing one or fewer deals a year.

On the other hand, you are only valuable to me as a broker if you are not increasing my liability. When you do nothing except pay me, I love you. When you write contracts or engage in other random acts of agency, you scare me.

Here’s the idea I had: You can hang your license with us for FREE. No monthly fees — forever. You arrange your own renewal hours and pay the state’s fees, but you own me nothing, and you can hang your license with me for free forever.

What’s the catch? You cannot ever write a contract or represent a client. You cannot do anything for which I can be sued. If you have a mother-in-law deal, that’s great. It will be handled by a working agent and you’ll get a 50% referral fee, with no nickel-and-dime brokerage fees deducted. Refer as many deals as you can — your referral fee is always 50%. You can’t do anything, but you can make a ton of money for doing nothing.

We Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

I love it! Inman Blog cites an amazing open letter from the Minnesota Association of Realtors to its membership.

The gist: Real estate brokers are retards but it’s not their fault!

Wait, that’s not right. What it says is, if you’re not making money as a Realtor, you should probably quit now, because your broker won’t sever you, even though, by not severing you, he is hurting his business and the real estate industry as a whole.

What it really says is this: The real estate brokerage safe harbor exclusion to the federal income tax withholding laws makes real estate brokers behave like retards, only this time they can’t seem to grow another foot to shoot themselves in.

Too frolicking bad for them, huh?

Here’s an interesting question: How do you charge a premium price for a commodity that is not in short supply? The DeBeers diamond cartel has an answer. The National Association of Realtors does not…

Technorati Tags: blogging, compensation for buyer representation, disintermediation, real estate marketing

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

We’re in the business of offering a flat-fee for buyer’s representation, we have been for a while. Cathy and I have both written contracts with the flat-fee language. But where policy can be fast, promotion takes time, and it is not until midnight tonight that we will begin to promote the flat-fee idea.

Even then we’re kind of a slow roll out, because we want to make sure that, even if we end up with a tiger by the tail, we manage to stop that tiger, as it were.

I know there are people following this all over the country, so if you want to see all the flat-fee features we have built so far, click away.

As with everything Bloodhound, there is a philosophy. Either we hate the way everything else is done or we simply love to do things differently, but, either way, nothing is done the way anyone else does it.

For the print ads, we are deliberately violating the visual style of these kinds of things — in two different violations. I don’t see any way for a reader to regard us as being something different if we look just the same. The same goes for the content of the ads — and each is also radically different from the other. We don’t have an unlimited amount of money, so we’re starting with something akin to a binary tree search to see what works.

There are two Realtor.com ads that will work together. These may not seem to be as radical, but we put a lot of thought into getting the reader’s response, if we can but once get the reader’s attention.

Finally there is one web-based landing page, so far. I have a killer alternate within me somewhere, but it is killing me to get it out. The idea of the landing page is to get people who have voluntarily come in from the ads to take the next step, filling out a home search form and setting an appointment. The appointment will be the actual close, but our plan — for now, at least — is to have no hands-on involvement Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

UrbanDigs.com offers some great practical advice on timing low-ball offers. TrueGotham offers further thoughts. Both of these posts are Manhattansized, so you’ll need to scale accordingly for your local market.

Bonnie Erickson at Real Estate Snippets has excellent advice on the subject of your Realtor’s excellent advice. We’re not being pushy, honest! We’re helping you quarry your home’s inner greatness.

From Jeff Brown at Behind the Curtain: What do you want from the news, truth or accuracy?

PressReal.com (blogrolled — sorry, should have done this a while ago) asks Who pays the commission?, a question near and dear to Bloodhound hearts.

On the subject of “discounting” generally, Greg Tracy at BlueRoof.com composes a symphony:

But the best part about our new company is all the support we get from our clients. The consumers like what we’re doing because we are a new business model and most consumers really don’t like the traditional real estate models.

It’s funny if you think about the whole criticism of “discount broker”. Some people from my previous brokerage say that I’m selling out because now I’m a “Discount Broker”. Well, what does that mean?

That means that I’m doing the same thing for less…

And that’s the criticism? Even funnier is when the large companies take out ads that put down “discount brokers”. It’s like Albertson’s taking out an ad that says don’t buy from Safeway because they sell things for less. That’s what these agents are saying. And it’s really funny because most of them discount their commissions too, they just don’t admit it. We don’t discount our service or cut corners, in fact we have higher minimum standards for marketing our listings than most of the industry.

When I meet with people and show them our model and how we can help them they get excited about our model. We’ve had people tell us they were going to name rooms in the home after us and they send us incredible testimonials and they refer all their friends to us, which is the greatest endorsement they can give.

(Gentlemen: If you have a lingering problem from the photo in Greg Tracy’s post, The Phoenix Real Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Okay, carrying on from the idea of the Divorced Commission — a condition whereby, by some means, the buyer’s broker’s compensation has been divorced from the listing agreement — what are the implications for the Multiple Listings Service model of propagating real estate listings?

As we are seeing, divorcing the buyer’s agent’s compensation from the listings agent’s compensation has salutary consequences with respect to the agency relationships of both sellers and buyers and with the cooperation of agents. By getting rid of the doctrine of procuring cause, we eliminate the need for high secrecy among agents.

The practice the NAR calls “cooperation” is actually a metaphor for a graduated hostility. Because there are two “sides” built into the listing commission, the short-term pecuniary self-interest of the listing broker is to keep both “sides” to himself. The idea of procuring cause is a way of inducing “cooperation” by delimiting and circumscribing what we might describe as the leonine avarice of the listing broker.

But in a condition of Divorced Commissions, the listing agent never has access to more than one side of the transaction (except in a disclosed dual agency). The buyer chooses his own representation, and compensates his agent from his own side of the ledger. The issue of procuring cause has become moot.

Moreover, an unrepresented seller has no need to worry about compensating the agent of a represented buyer. In the same way, an unrepresented buyer isn’t compelled to compensate the listing agent for advice and counsel he does not receive.

These benefits carry over to the MLS as well.

Consider this excellent harangue by Jay Thompson:

Pardon my rant…ARMLS (Arizona Regional Multiple Listing Service) drives me insane! There are “rules and policies” that every ARMLS member must follow. Failure to do so can (and should) result in a fine for each infraction. Here’s the thing that just drives me batty:

Real estate agent contact info in the public remarks section. It SHOULD be a flagrant violation. Why? Because I share a consumer version of the MLS listing with buyer clients and prospects. So I send a client/prospect an MLS listing, and right there plain as day Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

I think you’re twice a fool. We’re coming after our competitors on price because we already have them beat on service — and you know it. The farriers made your argument a century ago — with the same result.

Technorati Tags: arizona, arizona real estate, blogging, compensation for buyer representation, disintermediation, phoenix, phoenix real estate, real estate marketing

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Nominate me Ikonoklastes, for I am come to raze this temple of half-baked ideas. I want to come back to the MLS later in the week, and I have a deep need to expose the motivations of brokers, as these are distinguished from the motivations of lesser licensees. But for now I want to take on the idea of market value.

Jeff Brown, whom I admire without limit, asks of me:

I’m still wondering though about the apparent premise underlying your argument that says the buyer pays everything.

That premise is this: That somehow the market value of the home is controlled by something other than supply/demand, and the other factors of which we’re all aware. Would you please clear this up for me?

There are actually two different issues on the surface there, and there is still a third issue buried in the underlying premises.

First things first: In every economic transaction, unless the seller is taking a loss — or unless the seller pays for something outside of the transaction — the buyer pays for everything. This is true of anything that can be bought, and it is why — in every business except real estate — the buyer is given the red-carpet treatment. The seller (of anything) brings the value to be sold, but the buyer brings every dollar of the money, and every dollar that is disbursed to the seller and to any other involved parties is disbursed from the buyer’s pile of dollars.

In real estate, we make believe that the money is first transferred to the seller and then instantaneously distributed to the other parties, but this is a sleight of hand we effect in order to get the sales commissions past the lender. It might once, historically, have described a sequence of events, but even then the activity was a pantomime.

The seller does not cause the sale by claiming to pay for it. The buyer causes the sale, and no uncoerced sale ever happened until the buyer caused it.

Moreover, nothing in the laws of god or man ever prevented a seller from paying sales commissions out-of-pocket, in advance, instead of Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Taking on Mark Nadel’s white paper on real estate commissions, Kevin Boer at Three Oceans Real Estate points out that there is more at stake than any one particular negotiation:

Successful agents, however, know that a solid business is built on long-term relationships with satisfied clients. If a past client indeed thought his Realtor had left $10,000 on the table, that would be the end of that relationship. No more future deals, and no more future referrals.

For agents who think long-term, however, the math goes something like this:

20 extra hours of work =

75% greater chance of doing another transaction with that same client in 5 years

+

75% greater chance of getting 1 referral a year for the next 10 years from that client.

No matter how you slice that one, that’s a lot of money the Realtor is leaving on the table by being shortsighted.

This is a reasonable argument, and a one-off transactional analysis is common in economics, where entrepreneurs succeed by taking account of The Big Picture.

To be fair to Nadel, he suggests short-term incentives to offset what he views as short-term disincentives. His suggestion comes pretty close to a net listing, though, a type of listing contract that is frowned on by regulators in Arizona.

Here’s why: I convince Mrs. Newlywidowed that her long-time family home, now an empty nest, is only worth $90,000. I offer to sell it “for free” unless I can get more than $90,000, in which case I will take $.50 on the dollar for every dollar over $90,000. I sell the home for $300,000, taking $105,000 in commission, leaving $195,000 for Mrs. Newlywidowed, where she could have netted $282,000 or more.

That notwithstanding, Kevin has a fun take on this idea.

Technorati Tags: blogging, compensation for buyer representation, disintermediation, real estate marketing

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Northern Virginia Real Estate Guide has further thoughts on tailoring real estate commissions to fit the task.

Technorati Tags: blogging, compensation for buyer representation, disintermediation, real estate marketing

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Tyler Sookochoff ask these questions in a comment to another post, but my reply is long enough that I think it warrants a post of its own.

Marketing of homes aside, do you rely solely on your local MLS to do CMAs and price homes you’re hired to sell? Or could you survive/thrive without the MLS?

Too many questions conflated as one. There are actually three justifications for the MLS: Advertising, the co-broke — and protection of the earned commissions of “procuring” agents. The latter is what is literally meant by “cooperation” — all member agents agree in advance to respect each other’s client relationships, with a dispute-resolution procedure if they don’t.

If the MLS were opened up or replaced, would sellers still want maximum exposure for their properties? Yes, certainly.

Would this entail an offer of broker cooperation/compensation? That depends on whether the buyer’s agent’s compensation continues to come through the seller/listing agent, or whether the RESPA/HUD-1 procedure can be interpreted or revised to permit buyers to finance the buyer’s agent’s compensation as part of the home loan. (This is what is happening now, it’s just being done by sleight of hand through the seller and listing agent.)

Will brokers use whatever price information they have at hand to prepare CMAs? You bet — but not exclusively. Their own on-the-ground knowledge of neighborhoods and the comp listings, plus a first-hand inspection of the subject property are at least as important as any information derived from a database.

So the question is not, will I be stuck working without an MLS (commercial brokers often do, as do land and business brokers)? The question is, what form might a future MLS take?

For what it’s worth, I’m a skeptic on MLS-replacement for now. First, it takes an incredible amount of data to make an MLS listing worthwhile — more work than FSBO sellers might be willing to do, in many cases entailing knowledge they do not have. Second, significant details vary from one locale to another.

Witness: My friend and colleague Richard Riccelli is selling a triplex right now. What’s a triplex? In Boston and New York City, it’s a Read more