There’s always something to howl about.

Category: Disintermediation (page 38 of 43)

Cute little Trulia pleads, “Can’t we share the hate?!?”

Displeased, perhaps, that outfits like Redfin.com draw all the negative attention, Trulia Blog asks:

Does the MLS continue to believe that fascist dictatorships work?

Inasmuch as an MLS system is a mutually-voluntary membership organization composed of self-selected volunteers, each of whom voluntarily agrees to abide by a set of rules voluntarily established by the membership as a whole, it easy is to understand how Trulia Blog would mistake MLS systems for the second-most murderous branch of Totalitarian Socialism in history. They’re like twins!

An MLS system is a club. Whatever bad things we might think to say about a club, a club is still far more benign than even the most benign of governments. Why? Because you can quit a club, where quitting a government is difficult at best, impossible at worst — and almost always fatal under Totalitarian Socialism. If you haven’t seen a huge pile of bodies stacked up behind the local MLS office — there’s a reason for that.

There are three things you can do about a club you don’t like: 1. You can try to change it from within. 2. You can try to change it from without. 3. You can turn your back on it and up your own organization.

I have had nothing but good things to say about Trulia.com so far, but after this stunt, I have this much to add: Trulia, up yours!

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Real estate connections: Deep thoughts, podcasts and dead bugs on the headlights . . .

Jim Cronin at The Real Estate Tomato waxes philosophical, wondering, Is Big Brother Dead? A stray thought to the contrary: Panem et circenses?

The Realty Bloggers have a smart reflection on the slow but on-going ramping up of on-line real estate vendors.

There are two fun developments in our friend Richard Riccelli’s trial-by-FSBO-fire. First, he was approached by John Keith, an enterprising Boston Realtor and weblogger, who, having read about Richard here, offered to help him with a limited-service MLS listing. And second, Richard has a Strange New Respect for the idea of pushing the whole job of marketing a house off onto a professional. It’s not something he could actually do, of course. He’s too much a perfectionist — and the work product he produces for his home should be very instructive. But he understands now why someone else would delegate all that work, happily paying the fee.

Jim Duncan at Real Central VA asks Should buyers forego inspection in a hot market? His answer: “Hell. No.” I agree wall-to-wall, but there is a middle ground here: Inspect, retaining the right to cancel upon inspection, but specify that the home will be purchased with no seller-supplied repairs. In the Arizona Association of Realtors Residential Purchase Contract, we have seller warranties for all the major systems, so the buyer’s exposure is relatively minimal. (The AAR produced an “as-is” addendum that waives these warranties, making it entirely useless.) None of this matters in Arizona right now, where smart sellers repair absolutely everything before they list their homes for sale. But it’s a way of doing an “as-is” transaction without giving up everything.

Three from Sellsius°: The Future of Residential Appraisers links to an article discussing the further encroachment of Automated Valuation Methods on the appraisal industry. If I were building an AVM (ahem), I would hire the best available appraisers to point out the bone-headed mistakes in the software, then keep them working as an on-going Quality Control effort. As it happens, we are refinancing our home right now. I comped it for the lender, then Zillowed it to see how far off-base Zillow.com would be. Read more

Negotiating buyer representation: “Real estate is probably the only industry that doesn’t respect fully the person who pays . . .”

On the general topic of buyer representation, Jim Duncan at Real Central VA has a post up about being very choosy about which clients he will take on.

Interestingly, Jim provides a link to a specimen copy of a Virgina Asscoation of Realtors Buyer Broker Exclusive Employment Agreement.

I think this is a fine idea. We make copies of all of the commonly-used Arizona buyer contract forms available on our web site. Here is a link to a specimen copy of an Arizona Asscoation of Realtors Buyer Broker Exclusive Employment Agreement.

We are talking about how we might prepare this document differently, but for now we amend it as follows: The compensation listed on line 17 is “$10.00 or any mutually-agreeable sum.” The retainer fee on line 25 is “$0.00.” And at line 48 we add our standard firing clause: “This agreement will be terminated without recourse upon written notice by either party.”

My essay on empowering the buyer to negotiate the fees for their own representation is included in this week’s Carnival of Business at My 1st Million at 33. Frugal accuses me of being unfocused, to which my sole retort is a diffused glare, but adds this:

It really angers me that the sellers and the agents just don’t know who comes up with the loan or cash to pay their bills. Real estate is probably the only industry that doesn’t respect fully the person who pays.

I think that is beyond brilliant…

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The FSBO and BUBBA variety hour: How to make the buyer’s agents dance . . .

Our friend, colleague and personal marketing god, Richard Riccelli is getting ready to FSBO his Boston townhouse. He’s spent a year planning this down to the last detail, including condo-izing his property into two apartments so that they can be sold separately — or together if someone wants a residence plus servant’s quarters.

Richard was all over the idea of being a risk-loving seller, offering “broker participation” in such a way that a buyer can choose what, if anything, to pay for representation. This is the language he’s using on his promotional materials:

Buyers or buyer-designated brokers receive 2.5% of sale price at closing.

Perfect! A 2.5% commission is normal in Boston, and agents are always looking for that “broker participation” rider on a FSBO sign before they’ll invest any effort. But if a buyer wants to come in as a BUBBA — a buyer unrepresented by a buyer’s agent — the money’s there for closing costs or whatever.

It’s not quite right out there that the buyer can decide how that money is to be divided, if the buyer hires an agent, but there is nothing to keep the buyer from figuring it out. Either way, Richard gets what he wants: Avid interest either from buyers or from their agents.

With three exceptions, the silence from the real estate community on the idea of paying the buyer to pay the agent, rather than paying the agent directly, has been deafening. But there is more to real estate than Realtors. Unrepresented and semi-unrepresented sellers aren’t going to be invited to the Association of Realtors golf tournaments anyway. Writing their “broker participation” language the way Richard did makes perfect sense for them.

And that’s why it makes sense for Realtors, too. Whether they are correct or not, many people believe they can buy a home by themselves. In states where one or more attorneys are going to be involved anyway, they just might be right. Even in Arizona, if you have identified the property, agreed with the seller on terms and have effected the due diligence amicably, a title company will do all the necessary paperwork in exchange Read more

Incremental movement toward a blanket Zillow.com disclaimer?

Today brings a game effort by David Gibbons of Zillow Blog to address Zillow.com’s disclosure/disclaimer issue. The problem for me is that the material he cites is at least one click deeper than where he puts is and two clicks deeper than where it should be. Even worse, the page he cites makes even more extravagant indefensible claims than does the Zillow.com home page.

This much, snipped together from David’s text

A Zestimate is really a starting point in figuring out the true value of a house. A Zestimate is not an appraisal.

would be perfectly adequate — if it were placed prominently on the Zillow.com home page and any page from which a Zestimate can be run. Of course, the extravagant claims would need a pruning, too…

But: This is incremental progress, movement in the right direction. Good on ya’, David!

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Bed-time real estate blog-bytes: “A hammer’s a great tool until you have to paint a wall, right?”

Rey Estate: Make things simple!

In The Trenches: There’s gold in them thar data!

The Property Monger: Scuse me while I Zillow the sky…

Hamptons Real Estate Blog: Home prices are stable, but the Zestimates are surging.

Rubbing elbows with Nubricks gets Real Central VA, The Real Estate Tomato and BloodhoundBlog in The London Times Online. And you thought my English was hard to read!

Sellsius° counters: Write it so they can read it…

True Gotham: Give buyers real control.

True Gotham again (blogrolled): “It’s a mistake to set up any system that denies there is expertise in real estate.”

The RE.net has been itchingly acrawl with creepy stories about creative mortgages and imminent doom. I have no idea how many of those loans have already been refinanced, but, whether or not they have, there are a hell of a lot more happy mortgage stories than sad ones. Behind the Curtain (blogrolled for sheer effrontery) on negative-amortization loans: “A hammer’s a great tool until you have to paint a wall, right?”

Ardell says buyers and agents need to feel each other out before committing to each other. I don’t hate this idea, provided that buyers remember to nail down the terms of their representation before they run out and fall in love with a house.

Bubbleboys: This is what you’re looking for: The Lord of the Bubbleflies: Lean-looked prophet whispers fearful change, cultivating the worst impulses in otherwise decent people…

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Shadowing Zillow, filleting Redfin, and a “Just Plane Smart” approach to change in the real estate business . . .

Dustin at Rain City Guide is giving stat-dancing lessons today. I am neither as talented nor as interested as he is, but I do have an interesting statistic to reveal: Debunking Zillow.com is averaging well over 100 unique hits a day. All of my extended Zillow rants do very well, and Debunking Zillow.com comes in third if you Google on “zillow.com” — which many visitors to BloodhoundBlog are doing every day. It pays to keep things in perspective: Our Zillow traffic can’t hold a candle to that which is landing directly on Zillow.com. But for anyone looking for a second-opinion, and apparently many people are, it’s right there on the shelf next to the branded product.

There are two memes I hear all the time in the disintermediation debate that I think are incorrect. The first is the implication that anyone who expresses a skeptical or negative view of one or more of the dot.com RealtyBots is either an actual luddite or is in some way frightened by technology, disintermediation or simply change in any form. The second is the idea that disintermediation in the real estate industry will — or will not — take the course followed by travel agencies and stock brokerages.

For the first meme, I can discern no evidence whatever. It’s a caricature composed of characterizations rather than quotations with supporting links. Surely I would qualify as a technophile of at least the second rank, and my objections to Zillow.com and Redfin.com have nothing to do with technology, fear or even the idea of disintermediation as such. Zillow.com is deceptive in its portrayal of what it can and cannot do, and Redfin.com is a cowbird that incubates its buyer representation commissions in the listing agent’s nest. I am one of the most pro-innovation Realtors on the planet — and, in case you didn’t notice, yesterday I proposed an innovation that will, as a secondary consequence, obviate Redfin.com’s current business model. What I am opposed to — and what every honest person should be opposed to — is unethical behavior.

For the second meme, I think both the “will” and “will Read more

No Memory Hole at Redfin.com weblog, where the dance of the mantises goes on forever . . .

(This teeters right on the brink of being either gossip or a pissing contest. I want to document the facts in a permanent way, but I won’t be in the least offended if you press on without reading this.)

One of the interesting defects of the enblogged globe is the de facto Memory Hole effect. If I change the appearance of a weblog, every page will reflect those changes, as though they had been that way forever. If I change a post, it’s changed forever, with no reference to its past form. There are various web-based Wayback Machines, but there is no built-in version history so that you can track what I have done — perhaps with an eye to judging my motives.

It could be there is no Memory Hole at Redfin.com’s weblog.

From a comment by Glenn Kelman at Rain City Guide:

Regarding that reference, I had tried to explain that we deplore a particular tactic, not real estate agents, and I apologized. Later, before returning to this blog, I removed the reference from the blog, and inserted an apology with the same prominence as the original reference. This is because I respect Dustin, because I regretted the implications of my own statement, and because we all believe in fair, civil discourse.

And, indeed, this is the way that particular text appears on the Redfin.com weblog’s home page and at this permalink:

But there is no Memory Hole. The original entry is still on-line:

The reader comments are copied from the old version to the new, but the old version has not been supplanted by the new version, but, rather, duplicated and then edited.

I am drawing absolutely no inferences from this, simply taking note of a body of facts.

Further notice: I just went to set the trackbacks for the two separate permalinks — and they’re the same.

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Dissecting Glenn Kelman of Redfin.com . . .

From comments at Rain City Guide. I didn’t address this weblog entry from Redfin.com CEO and broker Glenn Kelman because I wasn’t sure how to strike a balance. But today, Dustin Luther offered this:

For those that haven’t seen Glenn’s comments on his blog, I highly recommend heading over to this post.

In case it wasn’t clear, Glenn is clearly not worried about making friends with real estate agents, and even compares listing agents (who don’t want to show their properties to Redfin buyers) to praying mantises who eat their pray: “a grisly illustration of realtors’ hopeful but incorrect argument that showing their own listing can procure cause for garnishing the buyer agent’s commission.”

P.S. Greg: he has a special treat over there for you as well…

This was my reply to him:

> Greg: he has a special treat over there for you as well

I saw it last night. I concluded that the man is a jackass and a fool. In rank order the fools would seem to be 3. Kelman’s clients, 2. Kelman himself, and 1. Kelman’s investors.

Debunking Zillow.com gets dozens of unique hits every day. Let’s go get sued, a blueprint for bringing litigation against cowbird brokers scores fourth when you search for Redfin.com. I think the people at Zillow.com have been very deft in the way they have dealt with criticism. I think Kelman is drunk on his own publicity. The route to fame can be long and uncertain. But it’s just a short hop from there to infamy…

Hustling uninformed newspaper reporters is one thing, but I’ll bet the man doesn’t have the guts to defend his business model in public against an informed questioner.

Further notice: Kelman adds a comment at RCG.

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Detailing the mechanics of the Redfin cost shift . . .

Taking on the New York Times’ fawning coverage of Redfin.com, Jim Kimmons at Transforming Real Estate details the details behind the cooperation/compensation model of real estate brokerage:

The contention that the listing agent should be pleased to show an “eager buyer” the home when they come with no agent is just not going to function in the way presented. Let’s say that I’m a listing agent and have say 20 listings. I know that many homes get shown upwards of 40+ times before selling, but let’s use 30 for an example. Also, I’m not sure how you can call someone an “eager buyer” when you’ve never met them and they’ve never seen the home, except in a drive-by. Now, using an hour each as a conservative example, if every buyer was a Redfin client, then this listing agent would work about 600 hours and drive a lot of miles in meeting “eager buyers” at their listings. Buyer agents do this all the time, but that’s what they get the 3% for.

Don’t stop there. There’s a lot more that Jim covers.

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Working the numbers on real estate business models . . .

Altos Research on Redfin.com and other real estate business models:

Sales guru Jeffery Gitomer puts it this way, “if you have to compete on price, You Suck!”

We all invoke financial services as the analog for real estate. What isn’t commonly noted is that as technology swept through the financial services biz, two things happened: prices went down (e-trade et al) and prices went up (hedge funds). Why did prices go up? The same reason they always do. When you provide more value to a customer, you can (and should) charge more. I for one am looking for the real estate agents/brokers/sites that blow away their clients so completely with service, that they’re happy to pay more than 6%. Those are the innovators to watch.

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Remarks from Redfin.com Broker Glenn Kelman . . .

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

Labor Day Linkathon: Catching up with real estate topics raised here and elsewhere . . .

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