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Month: December 2006 (page 4 of 6)

December 12, 2006

Why The Fed Matters to Real Estate

by

Mortgage Planner

Author website

Ben Bernanke HeadshotThe Federal Open Market Committee meets today and will keep the Fed Funds Rate unchanged at 5.250%. It is not what the Fed does, however, that should concern Americans. It’s what the Fed says.

First, a clarification. The Fed Funds Rate is directly tied to Prime rate which impacts lines of credit for businesses and homeowners. Ben Bernanke & Co. do not control mortgage interest rates which are determined by the mortgage-backed securities markets. This is another conversation for another time.

When the Fed adjourns this afternoon, it will issue a press release in which it will discuss the economy and inflation. The statement — not the interest rate — is the news worth watching because inflation can unravel markets and push mortgage rates back to their highest levels of the year.

The chain of events is pretty logical:

  • If inflation is growing at a faster clip than the Fed wants, it will tell the markets
  • If it tells the markets, markets will know that the United States Federal Reserve expects the dollar to lose value over time
  • If the U.S. dollar is expected to lose value over time, the U.S. dollar will be “worth less” to foreign nations
  • If the U.S. dollar is “worth less” to foreign nations, foreign nations will buy fewer U.S.-denominated securities because the relative returns will be less, too
  • If foreign nations buy fewer U.S.-denominated securities because the relative returns is less, the demand for mortgage-backed bonds will drop
  • If the demand for mortgage-backed bonds drop, the price of mortgage-backed bonds will drop
  • If the price of mortgage-backed bonds drops, the yield of mortgage-backed bonds will increase
  • If the yield of mortgage-backed bonds increases, then mortgage rates go up for Americans

It’s a long road to get to the conclusion, but this is the manner in which the Fed impacts real estate and mortgage lending. So when your local daily shows the headline “Fed Leaves Rates Unchanged”, don’t think the coast is clear. Read the article and dig a little deeper — it’s not what they did, it’s what they said.

December 12, 2006

Ask the Broker: Can I call the listing agent on the carpet . . . ?

by

Suburban Phoenix Real Estate Broker

Author website

I made an offer for a listing that stated the place has “brand new carpets” (not newer or new, clearly “brand new”). I found out after asking many times and when it didn’t make any difference money-wise that the carpet was installed when the seller moved in which is 1.5 years ago. Am I crazy to be totally upset by it? The seller has a dog and the carpet doesn’t look great. Can I file a complaint somewhere for her false advertising?

Okay, first, this is an excellent argument for working with a buyer’s agent. I would have walked into that house the first time and said to you, “This carpet is not new.” Brand new carpet smells like formaldehyde, for one thing, but it also has a sheen on it that wears away in just a few weeks of normal use. There is no way an experienced Realtor could mistake new for newer or used carpet. There are too many tell-tales that tell the tale on carpet that has been lived on.

So can you file a complaint for false advertising? My guess would be no. At the bottom of the real estate listing, it will have said, “Buyer to verify all pertinent details” — or language to the same effect. We have more buyer protections now than pure caveat emptor, but not many more. The inspection period provided for in your purchase contract is your opportunity to discover whether the horse you are proposing to buy really does have a leg at all four corners. If it doesn’t, and if the deficit is material — meaning it matters to you — then you should cancel the contract or seek redress.

This again is another good reason to have professional advice. If you’re paying a market price for a home that is not delivering market value, you should either cancel or renegotiate. If you are paying well under the market price, you might resolve to grin and bear it.

The seller’s agent also pulled a convenient offer out of her hat every time she needed to pressure us, but I don’t have any proof Read more

December 11, 2006

Dear Abby

by

Mega-Producing Realtor

Author website

Dear Abby:

I have two brothers and
two sisters; one brother
is a Realtor, the other was
just sentenced to death
for murder. My mother
died from insanity when
I was young. My two
sisters are prostitutes and
my father sells narcotics
to feed the family. Recently
I met a girl who was released
from a reformatory, where she
served time for smothering
her illegitimate child, and I want
very much to marry her.
My problem is this: If I marry
this girl, should I tell her about my
brother who is a Realtor?

December 11, 2006

Punch and Pie At This Week’s Carnival of Real Estate

by

Realtor, Staging Consultant

Author website

In my world, I need order, rules. This may be hard to believe when you consider I manage a household that includes thirteen rescue animals and a colony of about a dozen feral cats in our side yard. Ever hear of “herding cats”? This is something I try to effect every single day. I was the one, for example, who asked Greg to modify his open-forum policy on BHB comments, by removing extreme profanity. I understand that trash talk needs to be trashy or it loses its flavor, but sometimes comments on this site go beyond the pale. For a standard of what’s acceptable I like to use South Park. I realize this is a pretty low standard, but IMHO Matt Stone and Trey Parker are so spot on philosophically that I’ve learned to accept the verisimilitude of the vernacular of their eight-year old characters. If Comedy Central is up to it, then I suppose BloodhoundBlog can be, too.

All of this to get to why I would even care to paraphrase a quote from South Park – Bigger, Longer & Uncut. This is a very clever parody on, among other things, Les Miserables. Greg’s teenaged children have demonstrated to us that we’ve garbled the Eric Cartman quote, “people like pie,” but we remembered this quote by implication. There’s a scene in which the boys are trying to figure out how to get people to care about a meeting they’ve called to save the world, and Cartman suggests “more people will come if they think we have punch and pie!” Actually having punch and pie isn’t important… it’s only important that the people think there will be punch and pie, and people like pie (I still believe this must be an actual quote in one of the ten-seasons-worth of episodes), so give them what they want.

And it’s with this in mind, that I commend you to this week’s Carnival of Real Estate, which is up at ActiveRain, for some punch and pie.

More on me and rules… When BloodhoundBlog hosted CoRE this past October, we set up a system for ourselves to judge Read more

December 11, 2006

When It Clicks

by

Realtor, Associate Broker

Author website

We rely so heavily today on the internet to market our properties, but with so much information available to the would-be home buyer, our on-line ads had better pack a punch. This audience will forever be just one click away from the next property listing, and our “special” home will be all but forgotten. Galen Ward talked about the peekaboo law of home photography, and Ardell had a great footnote on the subject. Of course, Greg Swann had his own 3000-words-or-less thoughts on the topic.

Steve and I have an escrow closing today on a home that is the poster child for taking thoughtful photos to effectively market a property. This is what the home looks like from the street:

Not very inspiring, I’m afraid. It just looks like any one of another 120 or so homes on the market in this zip code today.

Here is the photo I used in the MLS and on the web as the primary photo:

This accomplished several things. It followed the peekaboo law by showing just enough to get the audience’s attention, plus it was a cleansing process which eliminated those that were water sport-averse. And, as Ardell recommends, it told a story – The story of a home with a beautiful pool. In this case, that was the story. Nowhere is it written that the primary photo must be of the driveway, and yet I would venture a guess that 99% of the agents out there succumb to this trap. If the front of the home is inspiring, then by all means use it, but if there is something better waiting for you once you cross the threshold, why not make it known?

By the way, the buyer of this home found it listed on Realtor.com and wasn’t even aware that this neighborhood existed. She wanted first and foremost (drum roll) a pool. At the initial showing, she had mentally purchased her pool, and the rest of the home was just icing that happened to convey. Had this not been the first photo she saw, she likely would have clicked on by.

December 11, 2006

Thank You, Mr. Barton, May I Have Another?

by

Mega-Producing Realtor

Author website

Richard_Barton_newRich Barton asking: “Why do some people take an instant dislike to me?”

My answer: “To save time”.

I’ll give Rich Barton and Zillow full credit for listening to the PR firm they must have hired. Just last February this is what Rich was saying:

Zillow’s Barton was quoted as saying that inevitably real estate services and fees will change as online services take hold. “I’m not implying that we have some new commission model figured out, but it feels like . . . Realtor services are going to be unbundled a bit,” he told Inman Real Estate News.

Nice, huh? Right out of the gate and the most important thing he has to say to the press is how HE is going to help drive down real estate commissions. Here is more from our new best friend, Rich Barton:

“People want Realtors,” he said. “But is it rational to pay Realtors what they are paid?” He says he thinks they are overpaid because customers are doing more of the work themselves.

Zillow, for instance, has a number of other features that do the work of the agent. Someone wanting to compare properties can use pull-down menus to estimate the value of remodeling projects that are not reflected in the price. Because of the Internet, agents are spending less time with clients, Mr. Barton said. “Agents have to ask, What kind of value am I adding?”

Mr. Barton does not exclude the possibility that the role of the agent, and his site, may change.

Good News Everyone! Rich added: “it is not our intent to dislocate the agent.” free stupid

He wants us all to earn less but he is willing to let us keep our jobs. This is good news – especially in light of the way he is now (just 10 months later) being heralded as being on the verge of changing real estate for the better. It wouldn’t seem quite so wild except it is Realtors doing the horn blowing for him. What must have occurred in that boardroom in Seattle?

“Listen Rich, if we are ever going to take over the industry you are going to Read more

December 9, 2006

Zillow.com versus Realtor.com: Nothing grows in the shade of great tree . . .

by

Suburban Phoenix Real Estate Broker

Author website

I think part of the problem, in understanding the radical nature of what Zillow.com did this week, is that we are conflating unlike things. As an example, when I speak of a National MLS, I am not talking about local MLS systems.

For one thing, the sine qua non purpose of a local MLS system is to advertise the co-broke commission to other agents, keeping it secret from consumers. This objective is not even on the radar of home searchers, whether they are looking at local IDX listings or a national site like Realtor.com.

Kevin Boer posted an excellent analysis of why Zillow will not replace local MLS systems. I agree, for now, but that’s not really the issue. In the second place, if we were to split the buyer’s agent’s commission from the listing agent’s commission, the entire rationale for exclusive local MLS systems goes away.

But in the first place, home searchers are not going to any listings systems to find out about commissions. To the extent that a local MLS system corresponds to a market as Kevin sees it, to that extent a national home listings service is an entirely different type of market. If the one facilitates the essential activities of real estate brokerage, the other exists to introduce home searchers to the real estate market, to particular real estate products and to real estate vendors.

They are not the same market, so conflating the two is an error. If you want, we can call the idea of a National MLS system something else: National Property Listings Service — NeoPoLiS, “new town” in Greek.

The point is that harping that Zillow can’t do this and Zillow can’t do that is completely true and completely pointless: Zillow isn’t doing those things, nor could it, nor should it. What Zillow might be doing, and only time will tell if it can pull it off, is creating a national clearinghouse for listed homes — which will be brokered by off-site — and normally local — means.

In comments to one of my posts, Dustin Luther raises some plausible objections to my arguments. His counter is that Read more

December 8, 2006

In the trenches with Zillow.com: A working Realtor’s first-hand experience listing a home . . .

by

Realtor, Staging Consultant

Author website

Zillow has had Greg’s attention for a long time, going back to an Odysseus post from last February, when we were blogging for our own entertainment. Greg has debunked Zillow, he’s defended Zillow, but till this week I’ve been indifferent. Zillow has held as much relevance for me as Ragnarok Online. Both have inspired a lot of buzz among their audiences, but neither made my life better, easier, happier, so I’ve not wasted time on them.

But this past Monday, when David Gibbons told us about Zillow’s plans to add the For Sale and Make Me Move tools to their comprehensive database, he gave me a reason to care. When someone hires me to sell her house, one of my jobs is to let as many prospective buyers as possible know that this house is for sale. Zillow will help me find an audience that I might not already be getting through buyers’ brokers, drive-bys, Realtor.com, open houses… So now Zillow has made my life better, easier, happier, by giving me a tool to bring my client’s house to more potential buyers.

To get to know this new tool, I claimed our own house on My Zillow. Here I got to experience first hand the problem with using Zillow for an accurate estimation of a house’s value. We live on a wonderfully eclectic street of ranch, bi-level and split-level 1960’s houses in the North Central Phoenix subdivision, Terry Terrace. Lots are all around 8000 square feet, but the houses range between 1400 to 2850 square feet. At 1993 square feet, ours is about average. The people who remodeled the house before we bought it did some wonderful things — enclosing the carport to make a 2-car garage and landscaping were minor compared to the the major improvement of raising the ceiling and removing the labyrinth of walls common in 1962, to open up the living area side of the house into two huge, very livable and very workable rooms. Then they added requisite granite, 18″ tile, designer cabinets and upgraded appliances. And, since we’ve moved in we’ve upgraded the bathrooms and all the Read more

December 8, 2006

Retirement Lifestyle: 3 Quick Peeks Into Your Future

by

Real Estate Investments Broker

Author website

I just got off the phone with a delightful lady, who has been assigned the impossible task of editing my blog. She’s now reviewing what I’ve done so far, and her preliminary opinion is that I’m not inarticulate. I’ll await her final call with as little anxiety as possible.

She did pose an excellent question about what I do.

She asked, and I’m paraphrasing here big time, “What about regular folk who are just plain afraid of taking that first step in investing in real estate for their retirement? The thought makes me more than a little nervous. Don’t most people fear their first foray into that world?”

Well, yes and no. Most have concluded on their own that the plan currently in place for retirement might be lacking in foresight. However, many think that if they just keep paying down their home loans, saving money in their 401K/IRA’s, and not living beyond their means, everything will work out. This is when they need a heavy dose of “I’ll never live that way” reality. The old ‘free & clear’ home plan is one of the most dangerous myths going today for Baby Boomers. It’s a prescription for a spirit crushing existence in what should be some of the best years of their lives.

Spirit crushing? If your kids live out of town, you can’t afford to visit them very often if at all without them paying your way. Trips to tropical islands sipping exotic drinks with umbrellas in them are not on your menu. Birthday and various holiday gifts – send a card because the money simply isn’t there. It’s Valentine’s Day and you want to take her to that ‘special’ place? You just don’t have an extra $100 for that. It gnaws at your spirit.

Many of us know retired folks living that life. It’s not a ‘lifestyle’ — it’s a life sentence.

I show investors three possibilities for their retirement lifestyle.

One is the status quo plan. They end up with $50-100k in their 401k, have a Social Security check for up to roughly $2k monthly, and if they can earn say 6% Read more

December 8, 2006

You were saying . . . ?

by

Suburban Phoenix Real Estate Broker

Author website

Chickens? Eggs? How about poached eggs on toast…?

BloodhoundBlog’s team coverage of the Zillow.com upgrades:

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December 8, 2006

Louis Vuitton and the French Revolution

by

Realtor, Associate Broker

Author website

Louis Vuitton and the French Revolution. That is what my daughter told me she would be learning about in her high school European History class. Right war, wrong Louis.

On the morning after the Zillow news, I had my own knee-jerk reaction. I subsequently took it upon myself to contact a preeminent real estate reporter for my local rag, the San Diego Union Tribune. I referred him to the many on-line discussions that were taking place, and suggested there might be a story here. Also, in an enlightened moment of shameless self-promotion, I suggested that on his next slow news day, he might investigate the real estate blogging phenomenon and perhaps even the surprising dearth of serious San Diego-based blogs. (Jeff, yours is an exception, of course).

Regarding the Zillow debate, and I will paraphrase, he indicated that they would not be pursuing the story at this time. Message being, no news here. Funny, I thought, as yesterday morning’s business section included the following headlines: Aeromexico begins nonstop flights from S.D. to Mexico City; Food is family’s matter (Chick-fil-A founder’s grandson opens a new local restaurant); and Yahoo! reshuffles top management. Okay, I’ll give them that last one. But, Zillow isn’t news? It took me an embarrassingly long time (one coffee refill) to grasp the underlying reason for his reluctance to acknowledge and address my issue.

The Sunday Homes section is gasping for breath. Newer, less experienced agents can’t afford it, and the more experienced, knowledgeable agents have all but value-engineered it out of the marketing equation. Print media no longer provides the results, the return on investment, that can justify this as a significant marketing dollar investment. In-line classified ads have become a component of our advertising arsenal only as they serve to placate our home selling clients, utilized almost entirely to “buy” our listings. The newspapers have their on-line counterparts, of course, in an attempt to compete in the IT revolution, but an announcement such as the one by Zillow yesterday serves as a painful reminder that they can’t.

I expect and hope that there will always be a place for the printed Read more

December 8, 2006

Price downturn less than scary

by

Suburban Phoenix Real Estate Broker

Author website

This is me from this morning’s Arizona Republic (permanent link). I wrote this on Monday, and since then the end of the month errors in the MLS have been corrected, so the percentages in the fourth paragraph have been revised to reflect the changes.

Price downturn less than scary

Here’s a question that cannot be far from every homeowner’s mind: How low will home prices go?

Despite all the media hype, values haven’t gone down very much. For the types of homes of greatest interest to West Valley homeowners, our recent appreciation boom continued through December 2005. Since then, values have gone down only marginally.

What’s the damage so far?

For newer, three-bedroom homes, we’re down 10.27 percent from the peak. Year over year, prices are down 8.72 percent.

Here’s the good news: Looking at two-year results on these homes, values are up 29.37 percent. Over three years, prices are up 59 percent.

(All these figures come from our Market Basket of Homes, which is available online at www.bloodhoundrealty.com/MarketBasket.php.)

But the burning question is, have we found the bottom of the market?

That’s a complicated question.

Doomsayers insist that housing prices will plummet or at least undergo a regression to mean appreciation.

What this means is that if West Valley homes “should have” appreciated by 6 percent a year, we will have to give back the gains of recent years, either by a quick drop in values or a long stagnation.

On the other hand, inventories of Market Basket homes are down precipitously from earlier this year. Sales are fairly high, compared with November 2003. Builders are clearing their excess inventory at a rapid clip. With a decent spring selling season, we could be through the worst of this downturn.

However, inventories are still very high. So, if you try to sell now, you will be in fierce competition with other sellers.

It’s probably wise to resist the urge to tap that equity in your home. Interest rates are very low, so you might refinance to get a better loan, to eliminate a second mortgage or to reduce higher-interest debt.

It remains to be seen if we’re out of the woods. But, so far, the Read more

December 7, 2006

Zillow redux: A post-diluvian retrospective . . .

by

Suburban Phoenix Real Estate Broker

Author website

Drew Meyers is doing an excellent job of cataloging the Zillow coverage. My plan is to ponder issues arising in posts and comments, here and everywhere. No guarantee that I’m not missing something, so it would be a great favor if you would point out my lapses.

Zillow understands PR. They’ve had company bigfeet out doing media drop-ins for a while, and, for the weblogging community, David Gibbons separately briefed Ardell DellaLoggia, Cathleen and me, and a third weblogger in San Francisco, identity undisclosed. The point of all this was to spread advance news of the upgrade, but to have it embargoed until 10 PM last night. I’m sure the resulting blog-frenzy suited them just fine, but, even knowing what was going to happen once news broke, there was no way I was going to miss this show.

But: This is why I wanted to go at the thing in the greatest depth I could achieve, right from the beginning. The fact of the matter is, the center of gravity in the real estate world shifted last night — away from Chicago and toward Seattle. It was only a partial shift, and it might turn out to be only temporary, but the professional porcupine that is the National Association of Realtors lost a double-hand-full of quills last night. If it continues to lose more than it manages to grow back, soon enough it will be nothing more than a naked rat. Then what?

The person I was most interested in hearing from last night was Galen Ward, and I said so right away at Rain City Guide. He didn’t disappoint, delivering a trenchant analysis without the advance notice Ardell and I had:

Zillow has the best shot at getting the chicken or the egg (you need one to get the other). Most non-MLS sites (Trulia, Propsmart, ForSaleByOwner, etc.) have had the nasty problem of beginning with no listings and no searchers (no chickens or eggs). Each has tried a novel and somewhat successful way of getting searchers or listings – crawling sites for listings, offering free listings, pay-per click ads to lure searchers, etc. None Read more

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Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

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