Category Archives: Investing

Let Brokers charge what they want. Do away with YSP.

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Couldn’t the whole yield spread premium (YSP) debate with all the trimmings end with a simple solution such as allowing the broker to charge whatever they want? Let the free market sort it out. Certainly lenders would have to be on board and do away with incentives or change them somehow, but it seems to me that everyone is making it so complicated.

Yes, compliance issues, licensing and fair dealing issues are important and should be implemented in some manner.

Solution:

  • Just disclose up front what the compensation is based on the interest rate or program the borrower qualifies for. Therefore…….
    • No more the need to attend sales seminars on learning how to overcome objections, which will allow more time to attend seminars on how to provide sterling service.
    • No more awkward moments for the loan officer attending an escrow singing when the borrower questions that “YSP thingy.”
    • No more loan officers asking escrow “how will you explain YSP” to the borrower, as if escrow’s response somehow dictates whether or not they will receive future business.
    • No more agents having to watch helplessly at their clients becoming frustrated or stressed out due to lending problems associated with YSP’s and the completely preventable situation where a transaction spirals out of control at the last moment.
  • How about lenders just have a simplified schedule of programs and rates that the borrower can choose from and if they pay a higher interest rate they receive a rebate that can be used on their behalf. How about just turning the PC monitor around and showing the consumer the several programs available and then have a good old fashioned counseling session. It would save every single moving part in a transaction a lot of grief. And it would save transactions from failing at the last moment because a “nuclear bomb disclosure” by a lender about the yield spread premium a loan officer is earning that freaks out the borrower.

I can just about darn near guarantee that if a consumer knows where all the chips are on the table, they would have no problem moving forward with a transaction. Give a consumer the very best rate they can qualify for, at the very lowest fee structure you can, with all the chips clearly on the table and Bam! you have a happy client, fostering long-term value.

When will someone just give the consumer what they want? Somebody is working on it and they are going to will be very successful. Is it really more complicated? If so, sound off.

Are you going to Vegas?

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or more interestingly, are you going to my presentation on Tuesday morning?

If so, I’d love to know. I’m just finishing up the presentation now and would love to include a few screenshots of people’s blogs who will be in the audience.

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By the way, the impetus for this blog post is that I like to localize my presentation. But considering most of the people in the audience will not be from Vegas, I’m looking for another way to personalize the show… Maybe it will work, maybe it won’t… but it won’t do much harm to try.

And there are lots of clues for what the talk filed under the seminar tag…

Tweet tweet

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So far, we have Jeff, Joel, Jessica, Keith and Myself prepared to twitter the NAR 2007. Follow along, or better yet tweet with us, at Jeff’s summary site: NAR Updates.

And I’m voting for using “NAR2007” (one word) as our tag on Flickr, YouTube, etc. Use it and you’ll make it easy for us to find your stuff! 🙂

What will a market slow down do to discount brokers?

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One of the reasons I became a real estate broker and started a RE company was because I felt 3% across the board was not right. Using capitalism, over the past 100 years as a guide, real estate will move away from the % model to a more competitive flat fee for service model. Speaking of Seattle in general, a 750k house is not worth $7,500 more in commission than a 500k house. Of course there are special circumstances, but on average.

The mood is changing in real estate. Greg Swann talks about some changes in the industry as a whole in his post here. The real change will come as full service agents become more and more aggressive for business. The slow down in the housing market will surely result in a long over due change in the traditional real estate commission structure. Following the typical paradigm shift, prices decrease, while customer services increase. This means ‘No Touch’ discount brokers will have it rough down the road. As more agents offer their services at competitive prices, discount brokers will loose their appeal.

I do not want to pin point any specific discount brokerages, but in the past week I have noticed two well known discount brokers signs taken down and replaced by reputable full service firms. Discount brokers are stuck at a flat fee with zero customer support (AGAIN… on AVERAGE).

The big question is, “Would the average buyer/seller rather pay a bit extra for a live body than an 800 number to call? “ Time will only tell, but in a service industry, price is never the deciding factor!

UPDATE: I have received an unusual amount of personal emails about this post. I would like to reiterate my reason behind this post was to show the real estate paradigm is shifting. My purpose WAS NOT to challenge the value of an agent or was I trying to make agents defend their side of the story (I am a broker so I guess mine too). My purpose was sharing my view of the future and what will happen.

Famous Real Estate Agent Found Dead

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Linda Stein, a New York real estate known as “broker to the stars,” was found dead, apparently bludgeoned to death in her Manhattan apartment.

[photopress:Linda_Stein.jpg,thumb,alignright]Her body was found on Tuesday by her daughter but the cause of death was not confirmed until an autopsy Wednesday. Linda lived by herself. The building featured heavy security and there was no sign of forced entry or robbery. Reports say that all people entering the building use the elevator and there is an elevator operator. Officials have not announced any motives or suspects in the case.

Linda was the ex-wife of Seymour Stein, former president of Sire Records, which was the launching pad for the Ramones, Talking Heads and Madonna.

Before real estate Stein was a pivotal figure in the early New York punk scene, co-managing the Ramones with Danny Fields, and was a friend to David Bowie, Talking Heads, The B-52s and Madonna as wife of Sire Records founder Seymour Stein.

Her career continued into the world of expensive real estate, as she brokered property deals for stars like Sting, Billy Joel, Harrison Ford, Rolling Stone editor Jann Wenner, LaToya Jackson, Sylvester Stallone and Andrew Lloyd Webber, amongst others.

For many local Seattle-area agents this brings up painful memories of Windermere agent Michael Emert who was murdered in January 2001 in a Woodinville home listed for sale. Mr. Emert was showing the home or previewing it for a buyer at the time of his murder. Mr. Emert’s body was found by the seller, who is represented by another real estate firm and was a stranger to Mr. Emert. Police believe that Mr. Emert’s late-model Cadillac SUV was taken by the perpetrator and later abandoned in Kirkland. As far as I know this murder was never solved. But it caused a major change in many agents behavior when meeting prospective clients and help inspire SKAR‘s (Seattle-King County Association of Realtors) “Safety Week

The Mortgage Witch Hunt

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Just in time for Halloween, officials from various levels of government are gathering together over the [photopress:salemexamof.jpg,thumb,alignright]frightful happenings going on in the mortgage industry. Home values were going down, mortgage payments were on the rise and consumers did not contact their mortgage professional for advice. Some were provided opportunities to own homes by using “non-traditional

Emergency Short-Term Housing In Southern California

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The interactive marketing team over at Move working pretty hard over the last few days putting together a list of available short-term housing options for people who were displaced by the Southern California fires. Our hope is that we can help people who are returning to find that their homes were either destroyed or partially burned find a temporary place to live while they get back on their feet.

With tremendous support for the Move Rentals team, we were able to reach out to local apartment associations and thousands of Southern California property managers, many of whom have been more than willing to forgo their traditional lease process and open up their vacancies to people on a short-term basis. Also, through the REALTOR.com team, we’ve been able to reach out to local and statewide REALTOR associations who have also provided lots of help in identifying homes and apartments that available for short-term leases.

Normally I don’t talk much about the work that I do at Move, but in this case, I’m going to make an exception because I feel pretty confident we’ve been able to aggregate the largest selection of temporary housing options for the fire victims and I want to get the word out to the RE.net community. Any help you can provide in spreading the word about the list of temporary homes for people displaced by the fire would be most appreciated.

Finally, one of the guys that works with me has done a tremendous job taking adding all the temporary listings we can find onto a Google Map. This has made it extremely easy for just about anyone with a website or blog to spread the word.


View Larger Map

Closing the Translation Loop

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A long, long, it-feels-like-forever, time ago, Anna covered the story that there were a lack of good translations tools available on the internet, and especially in languages like Russian. In that article, she linked to an article that showed Google had developed a much better translations service, but hadn’t released it to the general public. Well, I’m always interested in closing loops, and so I’m happy to report that Google just announced that their, much improved, translation service is now live at Google Translates.

What makes Google’s service interesting is that it doesn’t use the standard “rule-based” translation methods, but rather, it is much more statistical in nature:

We feed the computer with billions of words of text, both monolingual text in the target language, and aligned text consisting of examples of human translations between the languages. We then apply statistical learning techniques to build a translation model.

Anna and I couldn’t help but to try the service out, so we choose a Russian news site: pravda.ru and the results were pretty impressive (pravda.ru in English) as I could definitely pick up almost every story.

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My take is that the translation of websites is only the beginning for Google… Not only will they improve the translations (especially if enough users adopt their feature to “recommend” a better translation directly through the tool), but I can easily see a day in the not-too-distant future when this tool is built right into gmail or google chat. This could make it extremely easy to have an online conversation with someone who doesn’t even speak your language.

In my family this could be very useful as my wife’s parents do not speak much English (and I don’t speak much of their native Russian). At this point that means that my wife has to translate everything that is said between us. What if instead, I could simple email them (in English), but it would arrive with an accurate translation in Russian? The result is that it would actually be easier for us to share stories over email or chat then in person!

From a business perspective, the possibilities are fascinating… Why not translate an entire website (Welcome to “Дождь город

I have no intention of turning this into…

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a blog about southern California real estate, but I do have a non-fire related update from Southern California.

Brad Inman and I are going to be speaking at Beverly Hills REALTOR Association’s Head of High Office Tea this Thursday afternoon. From everything I can gather, it is going to be a pretty posh set-up at the Peninsula Hotel. The plan is for Brad to speak about the status of the industry for about an hour, myself to speak for about an hour and tea and conversation making up the last hour.

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Tickets are $40 and just about sold out.

Also, I shouldn’t admit this, but I honestly have not given much thought about what I’m going to say just yet… Conveniently, back in August I did a presentation on using blogs to build up an online brand for the KW Mega Technology Camp that came off well (and took about 45 minutes including questions from others who were on stage). I think I’ll adjust that presentation a bit but go with that general outline. If anyone who was at that presentation wants to give me feedback, I’d love to hear it! 🙂