Read, learn, mark and inwardly digest. If you weblog, it matters…
Technorati Tags: blogging
Month: December 2006 (page 3 of 6)
…is up at Seattle Real Estate Professionals. Moderator Marlow Harris presents awards in three categories.
BloodhoundBlog is a Carnival unto its own. Here are eleven entries from the last week that I thought were exemplary:
Russell Shaw: Thank You, Mr. Barton, May I Have Another?
Kris Berg: When It Clicks
Cathleen Collins: Punch and Pie At This Week’s Carnival of Real Estate
Dan Green: Why The Fed Matters to Real Estate
Greg Swann: Who needs Realtors . . . ?
Russell Shaw: Making Predictions, Cowards & Lies
Kris Berg: Between Rock and a Hard Place
Greg Swann: Everybody loves Ramen . . .
Russell Shaw: Anonymous Posters Who Hate Lereah
Jeff Brown: How Much Is An Excellent Assistant Worth? Are You Kidding?
Richard Riccelli: There’s no business like show business, like no business I know
Dan Green’s Why The Fed Matters to Real Estate was our entry in the Carnival of Real Estate, the Carnival of Real Estate Investing, the Carnival of Business and the Carnival of Marketing.
Cathleen Collins is the judge of our Carnival entries, but her Punch and Pie At This Week’s Carnival of Real Estate got the most votes from our contributors, so it is my honor to declare her the winner of the Bloodhound Carnival.
Marlow Harris hosts the Carnival of Real Estate at her own 360 Digest on January 15, 2007 — a week after Elvis Presley’s birthday. She threatens to have a category devoted to Elvis posts, which should be fun…
Technorati Tags: blogging, real estate marketing
We see everything through the lens of real estate, including films and television programs. It’s baked in the cake. Houses, always, and rooms and neighborhoods, and god help us if there’s a real estate transaction in a movie or TV show. When we were leaving The Pursuit of Happyness last night, Cathy said, “That makes starting out in a split shop look easy.”
(For non-Realtors, a split shop is one where you have to split your commissions with your broker. New agents often have to give the broker 50% of their earnings, and they may have to pay a mandatory mentor 50% of the remainder. The attested quid pro quo is training, but most new licensees starve and quit before they see much training. They often leave a ton of money behind in other people’s pockets, though, so almost everyone is happy.)
Anyway, the travails Chris Gordon undergoes in “The Pursuit of Happyness” make everything associated with mere straight commission sales look downright easy. Yes, I know successful salespeople go through a lot to get to a place where money problems seem remote, but few of us take the path through Dante’s torments followed by Gordon.
Despite a dogged persistence he is dogged by persistent failure. His wife leaves him, and he voluntarily undertakes the burden of single parenthood. All of his capital is invested in portable medical devices that street people keep stealing. He is evicted from his apartment. His limited savings are confiscated by the IRS. He and his son end up homeless, vying and sometimes failing to get space in homeless shelters. Through all of this, he is working as hard as he can in an internship at a stock brokerage, competing against nineteen other applicants for the one available paying position.
This is a Hollywood movie based on the real-life Chris Gordon’s autobiography, so you know how it’s going to end. It’s the getting there that makes this film worth seeing. To say it is inspirational is a massive understatement.
I’d tell you to go see it, but I can’t imagine that anyone who cares about human achievement would not see this Read more
You wouldn’t know it from its advertising, but Jordan’s is a furniture store local to Boston. And a rather successful one too. Always near or at the top of national lists for most sales per square foot in the retail furniture business. So profitable, it attracted the attention of the Sage of Omaha who bought Jordan’s with the expressed purpose of leaving a good thing alone. He wanted it to continue doing what it has always done: Act like anything but a furniture store while making money at a phenomenal rate.
If you didn’t know better, you might think Jordan’s was a movie theater. Or a theme park. Perhaps a restaurant. And when you got to know better, you would be right. That’s because Jordan’s realized early on that success in the furniture business first required success in the baby-sitting business. So they created stores that kids thought were way cool. A place where mom and dad would eagerly take them — and leave them alone! — for unadulterated fun. Mom and dad too thought this way cool. Because where else could they safely escape from the kids for an hour, and serenely spend their suddenly free time exploring an adult fantasy of their own? An Eden filled with rooms of perfectly arranged and accessorized furniture, all of which — when combined with a ready credit card and the relaxed sales resistance of couples floating in what feels like homes for their dreams — could be delivered whole the very next day?
Without jumping ahead, I know you already know what makes Jordan’s successful. And what you can learn from their example. The brothers Jordan asked “what business are we in?” And the right answer was show business. Entertainment for kids to be precise. A perfect, powerful synergy — because kids, most of all, drive the demand for furniture. You buy it when they’re born. You replace it as they grow. Again when they ruin it. And once more when they move away — free at last to repeat the same cycle.
Summon the gods and you’ll learn “What business are you in?” was Read more
My company is a two horse operation. And one of the horses has just been cleared to take on riders. Although in the past I’ve had several assistants, I’ve found that when it’s all boiled down, my business is built on the foundation of — homework. In the past my assistants were trainees on their way to becoming full time investment agents. So as soon as they became really good at being an assistant, they were allowed access to the next level. And I’d be back at square one — again.
It’s about to happen for the last time as my son has finished two years of training. He’s been my right hand, assistant, TC, ‘road guy’, and general doer of those things we’d all rather avoid. And now I have to figure out how to replace the irreplaceable. The cost to train and retain long term, an employee as effective as Josh would literally be unaffordable. How do you find someone who can solve problems, keep clients happy, snap the whip, and million other things? And on top of all that care as much as I do about the results? You probably don’t.
Enter Becky Bethke. Calling her a diamond in the rough would be damning her with faint praise. We’ve done about 20 transactions in the general Boise region in the last two quarters this year. Not a tremendous number, but enough to test the local supporting cast. I’ve gone through two escrows, two title companies, three lenders, two property inspectors, and a partridge in a pear tree. And one Transaction Coordinator. Though calling her a TC is an undeserved compliment to TC’s everywhere.
I won’t bore you with the details, but outside of delivering pizza and beer when escrows close, Becky does everything else. She calls her company The Closing Source. She calls herself a Transaction Coordinator. Trust me, she’s not a TC, not even close. My mom was an executive secretary back when that’s what they called executive assistants. In her prime she wouldn’t be a better assistant than Becky.
When we are successful in acquiring another Boise property Read more
I first heard of the idea of memes in 1986 or so. Analogized to a gene, a meme is a transmissible idea. We’re apt to think of things like “Dood!” or “Dyn-o-mite!” when we think of memes — linguistic fads — but the idea can run much deeper than that. For example, the principle that it is better to die for your principles than to renounce them did not originate with Socrates, but because Plato made the death of Socrates famous, he essentially transmitted the idea that defines Western Culture. That’s a big deal.
On the flip side of the coin, the analogy to genes is troublesome, insofar as it implies unavoidable transmission and relative immutability. The United States was founded on the meme “rights,” but there was no one among the founders who would have thought in terms of a “right” to subsidized food or to a subsidized crop. The meme persists, but the original meaning is vastly diluted.
That much is me, a sort of mild taste/distaste relationship with the idea of memes. I’ll get over it.
This much is the RE.net: I have been tagged by Jim Cronin of The Real Estate Tomato in what he says is a meme game. I don’t get why it is, but I don’t have to. I will play along because I like Jim, even though I detest party games, chain letters, etc.
My challenge: To tell you five things you did not know about me. My life is outrageously public, but — all appearances to the contrary — I don’t do very much to publicize it. If I tell you something about my life, it’s because I think it’s important to the point I’m making. Anything I don’t mention — I’d rather not mention.
So, here goes nothing. Five things you didn’t know about me:
- I’ve spent my entire adult life thinking about and writing about political philosophy at a very arcane level. The school I work in is called Agorism or Market Anarchism or Anarcho-Capitalism, depending on who you talk to. My own philosophy is called “Janioism” (a meme!) after a character in the book Read more
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
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
“name” wrote:
Lereah not only lies, he either knows or should have known he is lying, which means that if he is unaware that he is pathologically lying then he belongs in a psychiatric unit.
Point made. I’ll have him committed.
___
“David” wrote:
Lereah is a paid shill of the NAR, not a true economist. He’s never made a “prediction” in his life that would be detrimental to the realtors’ commissions he’s paid to inflate, or his own book sales
Surprisingly, after reading what you wrote, I now also hate Lereah. If an official Hate Lereah Organization (HLO) is ever formed, I sure hope you and I can at least be board members. It is totally understandable to hate all shills and any economist that isn’t “true”, especially if they work for NAR. Thank you for helping me to clear this up.
___
“Mike” wrote:
Please write if you ever get real work.Excuse me?
My opinion of you just plummeted, Mr. Shaw.
Aw crap! And just when your opinion of me was starting to matter too!
___
“Kaiser Sose” wrote:
Russell, perhaps you don’t remember the dot-com bubble of the late-90’s. Lereah is no different than the biased analysts that were promoting lame stocks by making rediculous assumptions. …. Here’s my prediction… In 2007 over $1 trillion of ARMs reset and many people will be under water. Foreclosures will continue to increase, and this market will probably bottom sometime in 2008 or 2009. I expect to see significant price decreases of around 20% to 30% in the bubble cities like Phoenix, but more modest decreases in other cities. We will likely be in or near a recession in the second half of 2007.And your prediction Mr. Shaw? Or are you just another blowhard shill without a clue?
I have already conceded the point that Lereah is just no damned good. Period. He is a bastard. But if I am also a shill – what is it that I am shilling? What is it that I seem to be “promoting”? I am leaving the blowhard and having a clue parts alone – as I can’t defend against Read more
As George Santayana said, “Those who cannot remember the past are condemned to repeat it.”
Okay, so what about the people the can remember the past, but choose to ignore it? There has to be a famous quotation for that, too, right?
On the front page of today’s Wall Street Journal, the headline reads: Housing, Auto Slumps May Defy Usual Role as Recession Harbingers. The authors note that home construction is “plummeting”; new car sales are “weakening”; and, long-term rates are “well below” the short-term rates — three major readings that preceded economic recessions of years past.
The authors then tell us that Wall Street is “betting that the old rules don’t apply”. A recession is possible, but not very likely. Says the head of a major economic forecasting group:
“This time will be different”.
I am not a smart man, Jenny, but I know what hubris is. The signs are all there, folks. So, keep your eyes and ears open because you’re going to hear the word “recession” quite a bit over the next six months. The more you hear it, the more chance that it will happen. It’s the self-fulfilling prophecy in action.
Here’s a true fact of life for almost everyone with a real estate license: This job pays really badly.
Here’s a true fact of life for a favored few people with real estate licenses: This job pays really well.
I don’t know if we can safely count ourselves among the favored few just yet, but being Realtors is throwing off a lot of cash for us, and that cash is throwing off a lot of opportunities to make more cash.
Last year was phenomenal, of course, and this year hasn’t been awful for us, considering how awful it was for other Realtors in Phoenix. We got a lot choosier about listings, which helped keep our money in our pockets, and we’ve both done more than we ever have before with new builds.
But: Do Realtors “deserve” all the money they make? I’ve had transactions — two closing later this month — where my total involvement was around five hours. I’ve had others that have run to hundreds of hours over the course of years. But looking at my added-value by hours or tasks or ergs of energy expended is a mistake. The value I bring to the transaction comes from knowing what to do, how, when — and why. Our clients do a lot better because of our involvement, and they are gracious enough to say so.
For now, our earning goal is $1,000 a day, each, call it $700,000 a year, gross. Obviously our expenses are huge, as are our taxes (grr!). Worse yet, we’re not hitting that goal yet. And to put things in perspective, Russell Shaw’s annual broadcast advertising spend approaches our total earning goal.
In the near term, I think we can double our numbers to something like $1.5 million a year, before taxes and expenses. From there, with a couple of assistants each, we might be able to push things to that amount, gross, each. In other words, without growing our head-count very much, we might be able to knock down $3 million a year in gross commission income. The net from that might not be all that great, considering, but it Read more
In a recent email exchange with the now infamous Bawld Guy, I suggested that the broken link I sent him was Truncated by Omission. In the Dave Barry vein, I had to add that this would be a great name for a rock band. Others that come to mind are Manhattan Transfer Forces Sale, REO Speedwagon (wait, that’s a real one, but I don’t think they meant Real Estate Owned), and NAR and the Sunshine Band, the latter being responsible for the modern-day remix “Tiny Bubbles”. Give me 100 aspiring rock stars, and I will give you, at best, one success story and one one-hit wonder. Can anyone say “Right Said Fred”?
Sounds just like real estate, if you ask me. Our industry is full of one-hit wonders. Most recently, the guy who cleans our spa called it to Steve’s attention that he is a licensed real estate agent. Don’t get me wrong, I adore Mark, but I had to once again roll my eyes at this little revelation. I am one exasperated exhalation away from from calling our California Governator to insist that real estate licenses be issued at birth. Let’s just cut through the red tape. Everyone seems to get licensed eventually, because it (the licensing part) is easy, and it appears at first blush to be the swiftest path to entrepreneurial nirvana. It is not the fact that you have one, however, but what you are able to accomplish once you get one (Greg scooped me here). So, bring ’em on, I say.
In San Diego, our Sports Arena is now the iPayOne Arena, named after the blockbuster bunch that brought us 251 sales (listing and sale sides) out of 58,706 total sides in San Diego County this year to date (according to our Sandicor MLS). For those without a calculator at their disposal, this equates to approximately a 0.4% market share. I guess you get what you pay for. Absent a local professional basketball team, our Sports Arena has been relegated to a venue for the annual Barney On Ice extravaganza and the upcoming, much anticipated Dancing with the Read more
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
“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
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