There’s always something to howl about.

Month: January 2007 (page 6 of 9)

NAR & DOJ – Russ & Russell Part 1

Russ Cofano responded:

Hi Russell,

Happy to add some background here. You ask, “But aren’t the “anti-competitive policies” basically who has the right to decide how and where listings will be displayed?”

Kinda.

The initial DOJ complaint against NAR revolved around NAR’s initial Virtual Office Website (VOW) policy that allowed brokers to selectively “opt-out” by not allowing certain brokers to display their listings online. This would have allowed a “traditional” broker the right to effectively hand pick the firms that they don’t want to compete with online by eliminating any chance for them to have inventory to show to prospective buyers. From the DOJ’s perspective, the problem was that the under these same MLS rules, that same broker could not prohibit a particular “bricks and mortar” company from showing listings to a buyer who walked in off the street. The distinction being online vs. offline. NAR then amended the VOW rule and replaced it with the new Internet Listing Display (ILD) policy which changed the selective “opt-out” to a blanket “opt-out”. In other words, the broker could not selectively pick which brokers could display their listings online. Either everyone or nobody. Since the ILD policy applies across the board, NAR felt that it eliminated the anti-competitive concerns of the initial VOW policy.At or about the same time, NAR changed its definition of “MLS Participant”. The new rule defines an MLS Participant as a broker who makes offers of compensation to and accepts such offers from other brokers. Prior to the change, an MLS Participant had only to be capable of making and accepting offers of compensation.

This last issue is, I believe, the REAL issue in this case. NAR wants to define who can have access to and display listing information online as brokers who are actively working with buyers and sellers and sharing commissions via the MLS. DOJ believes this is too restrictive and that any licensed broker should be able to have such access. DOJ believes that such restrictions will stifle innovative brokers from assisting consumers in non-traditional ways.

Let’s face it. Most MLSs are powerful entities when it comes to aggregation of Read more

Apple iPhone round-up . . .

This is nothing like everything, just a summary of news — and comic relief — of interest to the real estate community.

Dave Winer, among others, objects to the idea of the iPhone being a closed box. Okayfine. But it’s important for end-users to understand that the iPhone will run any server-side application that can run on the Safari web browser. Smart-phone apps are notoriously lame because of the memory restrictions of the device. We’re already using lots of server-based applications — our MLS system, plus all of the Realty.bots — and the immediate challenge is to get mission-critical web vendors to support Safari.

David Pogue at The New York Times weighs in with The Ultimate iPhone FAQ.

The Phoenix Real Estate Guy has a link to a fawning video from CBS News.

PressReal.com has heard the iPhone calling.

iFun: The Late Late Show, Late Night with Conan O’Brien, Saturday Night Live.

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Blogs can help Realtors connect with communities

This is me from this morning’s Arizona Republic (permanent link). Sadly for the weblogs mentioned here, I did a much better job of linking than the newspaper did — even on-line.

 
Blogs can help Realtors connect with communities

The year just past may have been the Year of the Real Estate Blogger — or it may turn out that that title will belong to the year just begun.

We operate a site called BloodhoundBlog, and the Valley is considered by many to be the epicenter of real estate blogging.

What’s a blog? It’s a cross between a newspaper and an online journal, with entries exhibited in reverse chronological order. But more than that, a blog is a community, with posters and commenters creating a conversation within a blog, and, ultimately, a conversation among blogs.

About 20 Phoenix-area bloggers attended a real estate blogging forum hosted last Friday by BloodhoundBlog blogger Brian Brady at the downtown Phoenix public library.

The event was a sort of get-acquainted meeting, with the attending bloggers introducing themselves and talking about their blogging experiences. Brady anticipates coordinating events like this on a quarterly basis.

My wife and business partner Cathleen Collins and I were there, along with Jay Thompson of The Phoenix Real Estate Guy and Jonathan Dalton of The Phoenix Arizona Real Estate Blog. Many of the bloggers present wrote blog posts about the event.

I spoke at some length about the push toward local content and local interest for real estate blogs.

Until now, much of the focus of real estate blogging has been on national and industry-related issues. Bloggers are working hard to discover new ways to serve their local communities.

Afterward, Brian, Cathleen and I spoke about big-picture issues relating to real estate blogging. One thought we had was to emulate the “Bloginars” held in Seattle and other cities by Dustin Luther and Russ Cofano of Rain City Guide. The objective would be to help Realtors, lenders and other real estate professionals learn how to connect with the community through real estate blogs.

What’s the benefit for the consumer? Eliminating the risk of the unknown quantity. You can shop for your next Realtor or Read more

Predatory Lending Legislation Can Prey on The Responsible

New Minnesota Attorney General, Lori Swanson, vows to put an end to predatory lending. She formed an 11-member task force to come up with proposals to curb the practice.

That sounds pretty good unless you don’t know how to define predatory lending. Arizona Governor, Janet Napolitano, pursued this fight back in 2000. She was Attorney General Napolitano then and proposed that Arizona adopt legislation that mirrored the North Carolina predatory lending bill. Napolitano had the good sense to listen to banking industry representatives before moving forward and was surprised with some of the things she didn’t know:

1- No “over equity loans”- VA loans are 103% value loans when a buyer purchases a home; that got cast aside as Arizona has a large military presence.
2- No negative amortization loans- three staff members had loans on their homes that were considered a violation of that guideline. They explained the usefulness of those loans as a financial planning tool.

3- No prepayment penalties- It was quickly realized that prepayment penalties reduce the overall costs of the loan and encouraged responsible home ownership by encouraging homeowners to view real estate as a long-term investment

4- No balloon payments- balloon payments can reduce the overall cost to the consumer and are now extendable with a good payment history.

This sounds like I’m an apologist for my industry; I’m not. There are some despicable originators in my industry who have taken advantage of consumers by:

1- “Steering” them in to more expensive first liens when refinancing for as little as $5,000 cash when a less-expensive second mortgage would have solved the problem.
2- Engaging in the practice of “flipping” loans through serial refinance transactions.
3- Encouraging borrowers to borrow more money they can afford.
4- Making loans to borrowers whom have not demonstrated an ability to repay the loan.

I wonder if legislation is really the answer to these problems facing our industry. I have repeatedly claimed that legislated loan guidelines stifle creative loan products that encourage homeownership and penalizes the 96% of the consumers who benefit from these loans. Borrowers make poor decisions, often against the advice of an originator. Prepayment penalties, negative amortization loans, Read more

Russ & Russell?

In response to this post, Russ Cofano (of Rain City Guide fame) wrote:

“For a division of the United States government to allege some sort of Realtor price fixing in an industry that is so overloaded (sic) with competition that it almost defies belief IS breading hate and contempt.”

In the present suit against NAR, the DOJ is not alleging price fixing. They are alleging a violation of federal anti-trust laws because of anti-competitive policies that allegedly make it more difficult for non-traditional brokers to “play”, harm consumer choice and stifle innovation. Russ

Thank you for the correction, Russ. There may also be other false impressions for me on this issue. I would be very interested in having someone who is extremely articulate and well informed (like you, for example!) explain why the DOJ may be right to go after the NAR on this point. I’m all for a level playing field for anyone who wants to play. But aren’t the “anti-competitive policies” basically who has the right to decide how and where listings will be displayed?

If you’re game – either send anything you want to post to me or just put it in the comments section and I’ll get an email notice from BloodhoundBlog. It would be a LOT more fun than the agency smackdown.

I would rather have a mind opened by wonder than one closed by belief.

Gerry Spence

What’s better than having a Realtor’s advice? Having a Realtor’s advice for free!

Last Friday, on January 5, our nephew Bryan celebrated his twenty-first birthday. Less than a week earlier, on New Year’s Eve, he wasn’t yet old enough to join in a New Year’s champaign toast at the club where’s he’s played gigs for the past few years. He graduated from high school three Decembers ago, last month he celebrated his second wedding anniversary, and later this month he’ll begin his fourth year in the US Navy, where he plays sax in the Navy Band Southeast’s Jazz Ensemble in Florida. And… he has already had three real estate transactions in escrow, every time without having been represented by a real estate agent. How has he fared in real estate? Not very well, despite being the favorite nephew of real estate professionals in Texas and Arizona. And why would that be? Because after having listened to the advice of his doting aunts and uncles, he followed the course that made the most sense to him and his young bride.

I don’t blame youth for real estate decisions that Bryan has made contrary to loving expert advice. I blame “human nature.” There is a reason that everyone who speaks English knows the old saw, “You can lead a horse to water, but you can’t make it drink.” I began this post with Bryan’s bio to demonstrate that despite his tender years, he has made several life altering decisions. And I should also point out that Bryan actually solicited our opinions, rather than having them forced upon him, which is so often the lot of young people. So you would assume that he asked our advice so he could mull it over, weigh it and then make a better decision having had the benefit of expertise. There’s even a good probability that Brian no longer remembers that Aunt Denise suggested he not walk away from his first purchase contract and his $5,000 earnest deposit, nor Aunt Cathy’s caution against buying a much lesser property, a condo, six months later, during Florida’s bloated seller’s market, for the same price he would have payed for the first house. Read more

Real estate in Deadwood: How Fremont Street in Las Vegas became a ghost town . . .

My mother gives us money for Christmas every year. This year we used the lucre to buy seasons one and two of Deadwood, the acclaimed HBO television series about gold-mining, lawlessness and profanetasizing — a condition afflicting screen writers, who pretend to affect to believe that people in the past were even worse potty-mouths than they are. In any case, the show is filled with dubious real estate deals, just the thing to keep us entertained as we wait for the next purple outburst.

Here’s an example: In the first few episodes, laconic hero Seth Bullock and his more loquacious partner Sol Star rent a lot for their hardware store from Al Swearengen — pimp, faro hustler, saloon keeper and curator and conservator of the Deadwood Hall of Fame of Outrageous Profanity.

What’s the rent? Twenty dollars. A day.

Deadwood is growing fast, and the bloom is barely off the boom. This is a seller’s market such as we have never seen. So when Bullock and Star offer to pay $1,000 to buy the lot free and clear, in fee simple — what should Swearengen do?

It’s worth $600 a month in rent. Potentially, it’s worth $7,200 a year. Why would Swearengen sell it at all? Why wouldn’t he lease it to the hardware store? They can improve it all they want, but those improvements and the underlying dirt would revert to his control when the lease terminated.

Better yet, why not write a participation lease? The hardware store planned to sell much-needed equipment to the prospective prospectors arriving by the dozens in Deadwood every day. Why wouldn’t Swearengen want to cut himself into a piece of that action, in exchange for surrendering for a term the right of possession to his lot?

If we stipulate that a gold rush is a short-term phenomenon, this would have been Swearengen’s optimal strategy for maximizing his own profit from the lot.

But what happens when a short-term windfall turns into a long-term travesty?

Last week I wrote about two multi-billion dollar multi-use projects being built on Las Vegas Boulevard — “The Strip.” Kirk Kerkorian’s MGM-Mirage will spend $7 billion to build Read more

If it’s Wednesday, there must be another dog in our house . . .

This is our son Cameron with a two-year-old Bloodhound bitch we adopted today. She came to us with the name Ritz, but I have chosen to denominate her Ophelia because I can’t stand for dogs I like to have dumb names. Her original owners were not able to take her along when they moved, so Ophelia became dog number five for us.

During the French Revolution, the worthy humanitarians who brought us the Reign of Terror took it into their heads that Bloodhounds were insufferable symbols of the nobility. In consequence, they set about to exterminate the breed. They were so successful that, when a semblance of sanity was restored in France, breeders were forced to mix other lines with the surviving Bloodhounds to bring back the breed. If you look closely at Ophelia, you can see that she is much closer to her Coonhound forebears than is the much larger, much deeper-chested Odysseus. The white on her chest and paws is another throwback to Coonhound ancestry.

We have an English Coonhound named Desdemona, and it’s amazing to see how similar these two dogs are. Ophelia is smart and fun-loving and eager to please. We’ll see if she has a future in advertising…

Amending this: We haven’t seen the papers on this dog yet, but we’re convinced she’s a Redbone Coonhound.

Community Choice in Real Estate

“Interested” wrote:

What would be the disadvantage of listing a home with a Realtor who charges a flat fee based on services provided?

Brian Brady responded:

I’d like to take stab at this question:

It’s economics. There is a school of thought that suggests that Realtors are clerks; some are. It has been my experience (as a Lender working with Realtors) that you really do pay for pricing expertise when you hire a Realtor. If you hire a Realtor for a flat fee, it may remove the incentive she may have to negotiate upwards.

I have been a fan of incentive-based compensation that would actually raise the net fee to the Realtor if pricing and timing points were met.
http://activerain.com/blogsview/22686/Pay-For-Performance-A

If you’re selling your home to your cousin, you don’t really need a Realtor; you could hire a real estate attorney to insure that the state disclosures have been met, and contracts are compliant with state laws. Just accept the fact that you really didn’t try to get the “best price”.

There really is only one way to get accurate pricing and that is from a Realtor who knows the local market.

I liked Brian’s response so much I posted it here – instead of leaving it in the comments section.

__

Then “allen greenspan” wrote:

So let me get it right. If I don’t believe realtors are worth 30k + to sell my home, and if I sell my home myself (like I have several times) then I am making the world a bad place? Do I follow your logic? Saving myself 30k dollars = breeding hate and contempt.In that long list of tasks you do for your clients can be done by anyone with an ink jet printer and a telephone number of an escrow agent. But we don’t want the public to know that! Why does the Justice Department say that NAR is the last Cartel? their words not mine, is the justice department breeding hate or breaking up a cartel?

Yes. The Justice Department (along with the FTC) IS breeding hate. That is exactly what they are doing. I really don’t give a crap who you list your home with Read more

Time mag on the iPhone . . .

Very worth reading.

Does this phone obsolete the Zune? Duh. The iPod line? Much of it. All other smart phones? Ancient history. Tablet computers? Most. Laptops? Lots of them. This is the first expression of the convergent mobile device — maybe the practical expression of convergence, period.

Next: Mad scrambling to knock off a device protected by 200 patents.

Then: Better versions of the iPhone from Apple.

If vertical markets were not infested with mental midgets who write MSIE-only crap, this might have been the silver bullet for Microsoft. It may turn out to be that yet.

This was a big day…

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Microsoft to add video games to Zune . . .

Wow… Evidently news doesn’t travel that fast…

But seriously: This is like Greek drama. How would it feel if your absolute best effort turned out to be a complete pig on the day of its introduction? And then, only a few months later, it had every last one of its teeth kicked out — by your arch-nemesis. And then, after that, you had to make make a lame-ass announcement that your little toothless brown pig will be even more obsolete — eighteen months from now. This is a day for falling on swords in Seattle…

Feed the starving Realty.bot: Zillow.com is underwhelming, so far, as a National Property Listings Service . . .

I think I have to back off — for now, at least — from my earlier expectations for Zillow.com as an incipient National Property Listings Service. To this date, anyway, Zillow’s appeal to sellers and listing agents has been underwhelming, at best. As I write, there are 19,250 homes listed for sale on the system. An additional 10,381 are listed under the “Make Me Move” option. By contrast, at the time that Zillow.com released these changes to its software, Trulia.com announced that it had achieved one million on-line listings.

At that time, I had written Trulia and other on-line listings aggregators off as dinosaurs, and I still believe this is true. But if Zillow.com represents the coming of the mammals, the first mammalian species to have evolved must have been the sloth.

What’s the problem?

No XML feed.

When these software upgrades were made, Galen Ward speculated that Zillow had skipped the feed to capture agents’ eyeballs for its advertising. If this is the actual reason Zillow elected not to permit listing by XML feed — as is done by the other Realty.bot listings aggregators — then the strategy has backfired.

Whatever Zillow’s reason not to have a feed, that reason is wrong. In making these changes, Zillow.com voluntarily surrendered the fearsome mojo of it’s Delphic Automated Valuation Method. Overnight, it transformed itself from every Realtor’s favorite bette noir to… just another listings bot. And as exciting as it might be as a listings bot, it’s but one more of what are already too many listings bots — and the only one of the bunch that can’t be fed from PostLets or vFlyer or one of many proprietary Realtor web site vendors.

That is: It went from being potentially threatening to Realtors but fundamentally useless to potentially useful but fundamentally a pain in the ass to Realtors.

This turns out not to have been an improvement, especially as Zillow.com prepares to roll out an advertising product targeted to Realtors. Zillow.com has always been able to deliver potential sellers — even as it delivers wildly inaccurate Zestimates to them. But without a significant number of homes listed for sale, Read more

More on the iPhone . . .

Apple. TUAW. Engadget. TechCrunch. Sign up to be the first one in your area code to get one.

Realtors should raise hell right now with MLS systems and computerized forms vendors: You have six months to support this device. I’ve been a Treo user since before Palm reabsorbed Handspring. This is the best Realtor phone yet…

Think about live-blogging with this phone… Think about conference-call podcasting… This is laptopia reborn…