There’s always something to howl about.
Don’t blame me for this, pin the blame on Matthew Hardy.
Note that if you happen to be the constantly-besieged president of a beleaguered trade association, I will be in Las Vegas on Monday, November 12th. I can show you how to get out in front of all these ethics complaints.
Technorati Tags: disintermediation, real estate, real estate marketing
The confluence of events:
Last week I received a lead from our lead generation system. I had only a name and email address: she wanted info on three listings, then two more, then the next day seven more, each emailed separately. There was no contact number, only her email address, and it turned out she wasn’t really in the market to buy, just curious. And: all she wanted were the addresses, was more than a little annoyed – so was I – she had to jump through hoops to get them. Damned REALTORS®!
Monday I was in a meeting to introduce our new company web site, including a new property search engine. The mock up included maps, street view and… addresses! Transparency; terrific! But, no, sorry, that’s not a real fixture. Apparently that’s against the bylaws of one of the five MLSs we deal with; “Besides, we want to give a reason for the phone to ring!” See above.
Then last night – after fifty plus sugared up munchkins – I opened my annual Portland Metropolitan Association of Realtors bill, which includes dues for PMAR, OAR, and NAR. Last year it was $343, and this year: $459. For those who dabble in percentages, that’s a 34% increase.
The stated reason: A $100 ‘special assessment’ to OAR:
The Public Awareness Campaign is an integrated program designed to address multiple issues facing the real estate industry in Oregon as a result of extreme changes in the real estate market including the sub-prime mortgage crisis, the threat of an initiative petition to give unfair advantage to a new MLS provider and the ongoing threat of a real estate transfer tax.
The Public Awareness Campaign special assessment will accomplish two goals – it will fund the specific campaign to raise the profile and enhance the image of our Members [sic] in the eyes of the public, and it will make available the necessary funds to educate the public regarding initiative petition issues that impact the real estate industry and consumers in Oregon.
So that’s a $2 million confiscation, not to study and/or implement ways to make agents more efficient, to make us Read more
Take a look at this map:
That’s the route from my home, in North Central Phoenix, to Johnson’s Ranch, a master-planned community in Queen Creek, AZ. The distance is 55 miles by the odometer, but travel time is more like two hours. It’s a brutal, awful trip, over two-lane roads for the last third of the ride, interrupted once a mile by four-way stop signs. In traffic, each one of those four-way stops could account for ten minutes of your travel time. An accident or an over-heated car could drive your trip time up to three hours or more.
What can we say with absolute certainty about Queen Creek?
How about this? It isn’t in Phoenix.
Johnson’s Ranch isn’t even in the same county as Phoenix.
So why, when the New York Times wanted to slime the Phoenix real estate market — why would it do so from Queen Creek?
How about because the real estate market in Queen Creek is astoundingly bad, and — unless you live here — you won’t know you’re being had.
Don’t confuse yourself. Skyharbor Airport is eleven minutes from my house, right in the heart of town. No one could fly into Phoenix, then drive through mile after mile of cattle-scrubbed desert to Queen Creek, and manage to confuse the two. The purpose of the article was deception, the same kind of slimy deception “professional” journalism has been able to pull off forever — until now.
Want proof? The Associated Press pulled the same stunt earlier this month.
I’m not being a pollyanna. The real estate market is rough right now in Phoenix. But it is a whole lot better than it is in Pinal county. Conflating the two is not an error of knowledge, it is a deliberate falsehood — just exactly as false as talking about single-family homes in New York selling for $350,000 — which I would imagine you could obtain 55 miles southwest of Times Square.
In any case, I’m not talking about these particular lies but about the pattern of lying, about the pre-canned story lines mainstream journalists try to foist off as “news” — until very lately with no Read more
In 1991, I was approached by Garry Fairbairn (he must have been a beautiful baby) of the Western Producer in Saskatoon (or maybe it was Regina), Saskatchewan, Canada to write a simple batch global search and replace utility that the paper could use to translate American wire service copy to King’s English spellings — color to colour, favor to favour, etc.
That was the birth of Torquemada the Inquisitor. Ultimately it came to be much more powerful, but, in the beginning, it did nothing but search for and replace string literals. I was developing a reputation as a Macintosh software developer who was interested in big text-processing problems. There was a good reason for this: I had big text-processing problems and I wrote software to solve them. Torquemada used the then-new drag-‘n’-drop technology in the Mac OS to permit users to run an unlimited number of pre-saved search sets on an unlimited number of text files. If you could write well-defined, error-trapped searches, you could automate a big chunk of your workflow.
Subsequent versions added wildcard searches, type-casting, wild strings, case-conversion, etc. Torquemada was pattern matching along the lines of the Unix GREP utility, but it was optimized for repetitive tasks common to text-processing, word-processing and typography. It was very useful in the early days of web-page creation, as well.
I named it Torquemada because I had already written a utility called XP8 (expiate, get it?). This was built to correct a huge number of defects common to word processing files in those days. In addition, it would pre-code text to be imported into QuarkXPress — then and now high-end Macintosh desktop publishing software — with many typographic refinements coded into the text on the fly. XP8 would remove the excess white space from around the numeral “1,” for instance, intelligently ignoring the lining figures in tables. It did quote-conversion better than any software before or since.
These two utilities had fairly similar objectives, and both were built expecting to do huge batch jobs by drag-‘n’-drop. XP8 was a brute-force front-end to Quark, though, where Torquemada was a general purpose text revisionist. In practice, for Read more
I live in an amazing world, which is to say a world by which I am continuously amazed, without boundary or graduation.
Here’s an example: I cannot for the life of me understand why National Association of Realtors President Pat Combs has not called me personally to ask me to come to Las Vegas for the convention to tell the NAR what it’s getting wrong.
Now you may think that’s an amazing hubris on my part, but in fact I am the obvious candidate for the job. Redfin.com’s Glenn Kelman is the only plausible alternative, but he is too much at odds with traditional real estate to qualify. I, on the other hand, am — on paper at least — the pot-bellied poster-child of the NAR — GRI, ABR, CRS the hard way. Add to that that I have spent many hundreds of hours detailing what’s wrong with the NAR, and have built a national platform from with to promulgate those arguments and, from my point of view — from Planet Cluetrain — the invitation should have been forthcoming months ago.
But there my amazement does not end. For, upon receipt of such an invitation, I would have to decide what to do about it. It wouldn’t be an easy choice. I think I might love to do it — on my birthday, no less — particularly if the audience were very hostile. But I don’t see that there could be any enduring benefit to it. If Pat Combs had ever even heard of the Cluetrain, she wouldn’t have any need to hear from me.
A nicer way, and I could do this easily enough, would be to go in and talk about the exciting world of Web 2.0 — and it seems likely to me that someone will be doing just that at some breakout session or another. And this will be just as stupid and pointless as the Inman BloggerDoggles, where earnest, well-intentioned people try to talk about community while a horde of congenital note-takers scribbles down tips on how to fake sincerity to snag more leads.
“The world sorts itself out” is what Read more
The stakes are high, as Brian has pointed out. You yourself have been smart enough to build a Web 2.0 marketing strategy, but now you’re faced with the possibility that your broker, with or without the help of the brokers’ cartel, the National Association of Realtors, may try to take it all away. Here are some things you can do to pursue independence now:
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Broker-controlled blogging was a hot topic this weekend. I tried to raise some eyebrows (and awareness) with my speculation about the internet land grab the employing brokers and banks might try.
I think a few things might have gotten lost in the translation. While I said that the brokers and banks will claim that it is a compliance issue, I believe that the REAL reason will be that they want to control the marketing channel to the consumer. Here’s what I said, over on Active Rain:
That will put pressure on the large companies to provide higher compensation to the more effective sales agents. That, will be the problem. Large real estate brokers and banks will severely curb the weblogging efforts of the individual sales agents in the name of “compliance”. In short, the behemoths will say that they can not adequately protect the consumer from the unsupervised local messages being offered by its sales agents. That, will be bunk.
The end-game play, the brokerage firms and banks will make, will always be about the money. Control of the customer has always been a competitive advantage for a large broker or bank. If that competitive advantage is lost, the value proposition of a large firm is lost. They won’t tolerate that loss.
What I’m saying is “The Compliance Argument is Crap- They Just Want Your Money“. I’m telling you this so that you are prepared when the NAR comes at you with the “Internet Compliance Memorandum” from their convention next month. I have no inside information, it’s pure conjecture on my part. This is, as Greg Swann would say, “evil dressed up in a Brooks Brothers suit”. My opinion isn’t biased against big brokerage firms, it will be even worse for the mortgage originators. Our evil is dressed up in custom made suits with Italian loafers- there is no way the big bank Presidents will allow their “salespeople” to live better than they do.
Look at the follow up articles on Active Rain:
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Frank Nelson, writing for the Sunday LA Times, outlined the knowledge crisis that affects our industries today:
“About half our members have never seen a down market,” said Colleen Badagliacco, president of the California Assn. of Realtors.
Edward Barrios, an agent with Shorewood Realtors in Manhattan Beach, believes a “gold-rush mentality” accounts for many of the people jumping into the real estate profession in recent years.
Some lack the necessary skills to keep pace with and interpret changing market needs, he said, and others are getting licenses just to trade their own homes, or do so for family and friends, saving thousands of dollars in commissions. “Every day,” he said, “I see agents who don’t know what they’re doing.
Agreed. I was astonished at the “gold rush” mentality in the real estate brokerage and mortgage origination business when I moved to San Diego in 2003. The effects of that mentality are being felt today. A local mortgage brokerage opted to cease its origination operations and concentrate solely on their business of buying out structured settlements. Essentially, they wanted to cash-in on the gold rush and hired originators, with little or no experience, and offered them unprofitable but generous compensation plans. Their strategy was to skim some money from the high volume.
They did themselves, their industry, and moreover, these originators a disservice. We’ve talked to a large number of their originators in the past two weeks; we’ve extended employment offers to two of them. One recent conversation was so ridiculous it was comical:
Are you closing 5 loans per month?
Uh, no. The market’s all jacked up.
Hmmm…perhaps you need some product education. How proficient are you on the AUS?
Say what?
Nevermind. Are you talking to at least five Realtors each day?
I won’t do business with Realtors.
Okay…how about CPAs, CFPs, insurance agents?
They refer business?
Let’s try something different. What sort of database management system are you using to keep in contact with your old clients?
Ah, man…I already refinanced those people up to their limits. They’re all pissed off now.
We, most likely, don’t have the resources you need Read more
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Realtors have to stop complaining about the sorry status of the lending industry.
Why?
They have the power to make a difference but refuse to take action. I have often heard the Realtors’ cry for licensing of loan originators and a plea for lending advisers to adopt a fiduciary capacity when originating a mortgage loan. Steve Berg makes an excellent case on The San Diego Home Blog for abolishing dual capacity, licensing originators, and establishing a fiduciary capacity for loan originators. The problem? Realtors are waiting for the lending industry to do this. That just ain’t gonna happen.
Realtors assume a fiduciary capacity for buyers. With that capacity comes a responsibility to assure that the buyers is getting good loan advice. The challenge? It’s the money, stupid!
How can the NAR really protect the consumer from unscrupulous loan originators? Adopt a standard which closely aligns itself with what the NAR membership wants. NAR membership wants to deal with licensed originators. NAR membership wants an independent fiduciary duty imposed upon originators.
Here are three ways Realtors can adopt to truly align their buyers with the originators they want:
1- Stop referring loans to originators at federally chartered banks. These banks are exempt from licensing and are limited in their product selection. The only way a fiduciary relationship can be established for your buyer is to refer him/her to an independent mortgage broker who is able to shop ALL of the big banks and smaller mortgage companies.
2- Insist on loan commitments from originators who are General Mortgage Associates of the of the National Association of Mortgage Brokers. To date, this is the only national organization that has stated that its membership must act in a fiduciary capacity to the borrower. In practice, the NAMB doesn’t give a damn but at least they state that they do.
3- Prohibit the membership from originating loans. That means that all affiliated business arrangements and common ownership of lending institutions and brokerages must be terminated. It further means that splits for individual Realtors (from employing brokers) will Read more
Responding at some length to a comment from Charles Woodall:
> Changing the real estate business in the grassroots effort you suggest would be a slow process as well.
I know you’re not joking with me, but are you aware of how quickly the real estate industry is changing right now? None of this is happening through the NAR cartel.
> it would literally take thousands or ten of thousands of people to make it happen.
Shazam! Here we are. BloodhoundBlog is just a part of the changes taking place, but we talk to tens of thousands of unique souls every month.
> We already have a powerful trade organization in place, so getting a few hundred people involved would be easier, in my humble opinion.
You’ve already talked about how it was virtually impossible for you to make an obviously necessary change. The NAR exists to milk agents, consumers and the taxpayers, in that order. It will not even try to do anything else until it is much too late to make any difference.
> While your thoughts are noble, and I agree on several points, until leadership in REALTOR associations on the local and state level want to move into the 21st century, it just isn’t going to happen.
It’s not going to happen.
> Folks such as yourself getting involved will be required.
First, people like me will never get involved with the NAR. I personally am deeply philosophically opposed to what I consider to be the criminal objectives of the NAR, but even someone less philosophically fastidious is going to achieve far better results by improving his own mind, rather than wasting vast amounts of time trying to herd mental dinosaurs toward a future they despise and think they can avoid.
There are actually three issues that you are raising.
The first is that I — or someone like me — would be profited by participating in any sort of committee work, even if it didn’t involve lobbying the state to point its guns at innocent people. Assuming a committee can learn anything at all, it cannot learn any faster than its slowest member, and committees seem to me Read more
I don’t pretend to understand the half of what Greg is trying to convey. This much, however, I will confess. Government is necessary, coalitions have value, and social responsibility is incumbent on all of us.
Slam zoning laws if you must, but if, as a homeowner, you suddenly find yourself sharing responsibility for maintenance of your side yard fence with the owners of the strip club next door, you will undoubtedly see some benefit in government intervention. I did time in Houston; I know of what I speak. If you loathe the union that professes to defend your profession and your livelihood, consider that you have choices. These choices may include speaking from a pulpit of change and reform while all the while paying your member dues or, alternatively, resigning and declaring free agent status. And if you detest government intervention in any form, consider that it is necessary for an orderly, progressive, sustainable society.
Who is not to blame for the mortgage mess? Take one step back. As lenders, money was flowing from the spigot like there was no tomorrow. As mortgage brokers, there was money to be made by cranking the faucet, and it was a foot race to see who could get to the sink first. As agents, we sang the “Houses are expensive, but money is cheap” refrain until we were blue in the face. And, as for the consumer, it really doesn’t matter in the final analysis whether they were motivated by necessity, opportunity or unadulterated greed. We all helped make this bed in which we now must lie.
Kudos to the Feds for being reactive if not proactive. Without a decisive response to our current situation, water under the bridge be damned, many innocent and not so innocent citizens would continue to suffer. Libertarianism is just ducky, ducky, that is, until the basic fundamentals are violated. The human condition all but guarantees that our unchecked actions will affect those around us.
Government regulation does not, did not, result in loan fraud or financial overcommitment. Government regulation can not be fingered for the shortcomings of the lending or real estate professions. Government intervention is neither the cause Read more
Proposition 1: Groups, clubs, committees and professional associations would make better decisions if their smarter, more passionate members were to get involved.
Proposition 2: Central banking would work if only Alan Greenspan had a smarter brother.
Proposition 3: True Communism has never been tried.
I don’t consider these statements equivalent, but they are of the same species, the Wishful Thinking Fallacy.
Inasmuch as we are living through the nightmare of Proposition 2, one might think we could learn a lesson. We won’t, and every eye was on the Fed this afternoon.
Parents who wrote a fat check for a skinny college Freshman in August can expect the return on their investment in the form of Proposition 3 over Thanksgiving dinner.
From Proposition 1, though, there is not even the comic relief of a sardonic resignation. We want so desperately for it to be true that we will not even consider entertaining the obvious truth that all committees suck, and good committees suck the least when they adjourn early.
These three propositions are alike in another way, a way that illustrates why they are uniformly false, any devout wishing to the contrary: All three turn on a power devoid of consequences. They are fundamentally anti-Capitalist. Their errors are not correctable accidents, they are a necessary consequence of the caprice that is the opposite of Capitalism:
But in fact, in politics and economics, the opposite of capitalism is caprice. A government’s decisions are not awful because they are always corrupt — although they often are. They are awful because there is no reward for being right, no penalty for being wrong, and no one anywhere to take responsibility for anything either way.
Capitalism is not instantly rational — it is not always automatically right about what to do, where and in what quantity. But capitalism is ultimately rational. In due course, entrepreneurs will achieve something approaching optimal results. Why? Because they are rewarded for being right, penalized for being wrong, and they are proud to take responsibility for their endeavors.
Matthew Hardy left what I thought was a brilliant comment to my post on technological ineptitude at the Arizona Association of Realtors:
So the Read more
To: Ron LaMee
VP Information Services
Arizona Association of Realtors
Ron:
Russell Shaw argues to me that I have been unfair to you, or at least unnecessarily rude. I don’t concede the point, but I am willing to elaborate on the issues at contest. In all honesty, I don’t expect anyone in my slice of the NAR cartel — the Phoenix Association of Realtors, the Arizona Association of Realtors, the National Association of Realtors, or the Arizona Regional Multiple Listings Service — to exhibit anything I would regard as an improvement, but it’s possible other, less-entrenched entities in other parts of the country can benefit from this discussion.
Before we get started in earnest, I want you to take a look at this map-based MLS search interface. Estately.com is my current pet, in no small measure because it integrates all kinds of neighborhood and transit information into its visual representation of MLS data. There are other cool tools out there: Windermere has a very sexy map-based search. RE/Max has a national MLS system, and Keller-Williams can’t be far behind in that regard. Even so, the market leaders for all of these very cool tools are third-party start-ups like Zillow.com and Trulia.com.
I realize that much of the software I’m talking about is outside your immediate purview. The point is that traditional Realtors are sinking fast, technologically, and you, Ron LaMee, are shuffling deck chairs on the Titanic while you try to hustle us into buying even more of the same obsolete crap we’re already drowning in.
Criticism stings while you’re getting it, but, in fact, it is by addressing the specifics of criticism that we substantially improve our performance. Most people take what they get uncritically — they take crap because they expect crap — but a sincere, informed critic is the best goad a person or organization can have to get rid of the crap in their product or service. Of course, most people and most organizations change nothing, preferring instead to resent the critic for exposing their crappy offerings to the light. In the free market, these problems are eventually corrected by auctioneers. It remains to Read more
Coming back to this, with my apologies for the delay. I realized I was never going to have time for the whole feast at one sitting, so I resolved to take it on one bite at a time.
I want to examine some of the ideas and objections people have raised with respect to supplanting the NAR with a more rigorous predictor of quality representation. And: I’m being as vague as I can because, while I think we’re all interested in hearing specific ideas — or caveats about those specific ideas — I don’t think we’re anywhere near ready to erect or enact anything. In construction terms, we are not building, drafting plans, designing or even site planning. At this stage, we are talking about whether or not to build anything at all.
For what it’s worth, my natural inclination is to do nothing. For more than a year I’ve been talking about the kinds of things we do to obviate our competition. We get better day by day and they’re all standing around with their thumbs… duly engaged. Our reputation grows with every home run we hit. In the market niche we farm, we don’t need a third-party imprimatur of quality. Res ipse loquitur.
However: If we argue that there are too many would-be real estate practitioners, that many of these folks have much too little training and experience, and that buyers and sellers would have a safer and more satisfying experience if they learned to seek out higher-quality practitioners, then there is an argument to be made for creating something like an Underwriters’ Laboratories rating organization for real estate agents.
One of the commenters to my original post on this subject wrote:
If we want to eliminate half the licensees just raise the barriers to entry…require an apprenticeship…or raise the licensing fee…or make the licensing test harder…or make the continuing education harder…or all of the above. These steps alone will raise the quality of service in the industry.
These are ideas we hear all the time, of course. So why are they never ratified in law?
The real estate licensing laws are controlled by the brokers, Read more
There has been a lot of talk about how to fix the National Association of Realtors or even how to supplant the organization completely. As an outsider looking in, I have one simply question: Why are realtors paying good money to an organization that they hate? As an investor I cannot not think of a more egregious instance of throwing good money after bad money. I have said more than my fair share of bad things about the NAR and realtors, so I think it is my turn to be solution-oriented.
My solution is simple, instead of working from the bottom up, start top down. If the best realtors/agents formed their own group, they would instantly dominate whatever market they chose. Imagine, if you will, that the NAR was made up of only the top 10% of agents in the country. These agents have a proven sales track record, impeccable ethics, and strong client feedback. Additionally, the MLS is one of many marketing vehicles they understand and use regularly. Simply guessing, this group would probably have quicker close rates, achieve better prices for their clients, and have a much better pulse of the direction of the market.
Such a simple idea must have many flaws, so I will start naming a few obvious ones and propose solutions that would seem to work. Remember, I am on the outside looking in, so feel free to comment if these are way off. First, the most obvious problem is the MLS access issue. I think this problem actually solves itself. Consider how large the listing database would be if the top 10% of the real estate community decided to leave the MLS and start their own listing service. Additionally, many areas now have a public MLS or many other listing services in addition to the current NAR controlled MLS. Finally, imagine the hit the MLS would take if the top 10% of the real estate community chose to stop listing with them? That might open some eyes at the top.
Second, how do you get the top 10% of the real estate community to come to this Read more
