Truth or Great PR

Posted on September 4, 2006 by Russ Cofano

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As I was doing my normal Sunday online reading, I found this NY Times article about discount commissions that really was a featurette for Redin. In the article, there are anecdotal comments about seller’s agents not being willing to show Redfin buyers their listing. There is also a quote from our own Marlow Harris of 360Digest.com alluding to the possibility that these stories may be more PR than truth (my words, not Marlow’s). A Windermere agent is quoted as saying that such claims are “absolute absurdity.”

So I have a couple of questions. First, are there a significant number of listing agents out there that will look down on buyers who use non-traditional brokerages (even to the degree of making themselves unavailable to show the home) or is this just great PR spin? If there is any truth in the claims, I presume that these uncooperative agents take this stance because they don’t feel like they are paid to fill the traditional role of the selling agent (e.g. showing the home). If that’s the case, then why don’t these listing agents incorporate a variable rate commission (similar to the strategy builders have used for some time to address the selling agent who magically appears after the site agent has done all the work of “selling” the buyer on the new home)? NWMLS rules would allow it, so why is it not being done?

Simplifying the buying process

Posted on September 4, 2006 by Eileen

5 years ago on a plane to Hawaii I started writing a Buyer Book to help me when working with my buyers. I couldn’t find a good one that made sense of our local market and spelled out what needs to be answered before a buyer even starts looking. I have a development partner in Hawaii and have good memories of writing this book, sipping Kona coffee from his sister’s plantation and eating Orange Bread on his incredible water view patio. Unfortunately, I had to come home and it took me three more months to finish in the rain.

Why did I write the book? Because I wanted buying a house to be fun and as simple as possible and buyers hate seeing houses they don’t really like. After all, how do you decide where to live and what to buy, if you’ve never been asked the questions that would get you a good working answer. So, after 10 years as an agent and starting out like all agents do by picking out 30 houses or so that “might” work for the buyer, narrowing it down to what I considered the best 10, showing those, making a buying decision and then the “buyer’s remorse” because they wondered what else was out there.

Given that I’m mostly an analytical person, I looked for the “kiss” in the purchasing process and came up with what has been unfailingly the most basic questions that must be examined before you even get into a car with a buyer. So here’s how I work: the buyers read the book and agree to independently (partners separately) fill out a questionaire that tracks with the book before the first 2 hour consulting session which is usually on the morning before going out to buy a home. Those 7 anwers are what I springboard from in the search. I have a picnic lunch prepared and we are now looking at only homes that really do meet their requirments. No buyer’s remorse since they’ve narrowed down the search themselves. The know that if they see a sign on a home that they didn’t look at, that it simply did not meet their requirements. These buyers are also prequalified and we know their housing price limit before our meeting.

People buy with the following criteria, whether they know it or not and buyers can use this criteria to find their home: (not necessarily in this order)

1. What importance is their choice of schools (I once had a young couple, he said it wasn’t important, she said it was, and she announced at the buyer consult that she was pregnant. I left the room :))

2. What importance is the commute: I usually hear 20-45 minutes (unless it’s a microsoft buyer), so then we talk about what hours the commuter works to determine how far out they can live, keeping in mind the school parameters.

3. What importance is a development with CC&R’s vs one without. I explain that although they might not want control on the color they paint their own home, but do they want an airplane parked in the front yard like I saw one day in a Parkland neighborhood near Tacoma. This is an extreme example, I know

4. How important is yard size. These days with all the dogs, many buyers think they ‘need’ a large yard, which leads me to the next question.

5.What importance is the age of the home. Most 30 somethings hate the home they grew up in and they almost always hate the splits. However if you want a large yard, but want a new house, then you’ll probably be paying 3 times what your budget allows, so if the large yard is really really important, then be prepared for 15-20 year old home or older. You have to buy a home where the land was developed before the local jurisdictions started enforcing federally mandated land use restrictions requiring greenbelts or common areas. The result of the federal legislation is that by 1999, all municipalites had to come into complaince with new land use rules. Over a 10 year period, all municipalities had to ensure that all developments must have a very large portion (40-60%) of a development set aside as communtiy area. The latest municipality that I know of to come into compliance was Montlake Terrace, which barely made the 10 year limit. For the developers to make enough profit to make the development feasible, the remaining land had to be divided by the same number of lots, making the lots much much smaller.

I’ve done my own casual research on how the public sees this land use change, and when I ask customers which they’d rather have, large yards or community spaces, they overwhelmingly chose community spaces. So, though we don’t like it, we don’t like it less than we like the new communities with all their parks and community feel (Ergo, the popularity of Issaquah Highlands).

6. The next question is how important is the style. In other words, do you hate splits, do you like to see alot of volume and want a vaulted living room, or does that mean you have to just heat the empty space. Do you have to have a rambler, and depending on budget, are you prepared for townhouse or condo living.

And last but not least

7. Do you want to have a house in complete move in condition or can you do some of the work yourselves after closing.

These 7 questions have been all that I’ve needed to narrow down the search. My buyers fill out the questionaire first before our 2 hour meeting, then armed with those parameters, I have a pretty good idea where the buyers will end up. We pick out thier own houses online and then with a picnic lunch, out we go to preview the properties that they picked. Normally, they buy on this first day, since we have narrowed down their search together and they almost never have buyer’s remorse since they pretty much scoured the enitre market themselves with me just acting as coach.

This has worked great for the last 5 years. My buyers love it and are amazed at how you really can create a structure out of the 6500 or so listings online. AND be right about it!

Labor Day – The "fruits" of our labor

Posted on September 4, 2006 by ARDELL

[photopress:labor.jpg,full,alignright] One of my most memorable transactions here in the Seattle Area was assisting a “homeless woman” with the sale of her house. Seems like a contradiciton in terms, I know. There was a woman who walked the streets wheeling a child’s suitcase behind her who “owned” a gutted, burned out house. She had put a For Sale By Owner type sign on it with a phone number, and a local agent had brought her an offer on it by the time I received a call from her asking for assistance. In fact she was seeking the assistance of another agent in the office, who had already asked for my assistance on handling this when the call came in, and it was pure coincidence that I happened to answer the phone when she called.

I cannot go into any more detail because this was a very unique transaction, to say the least. Besides throwing legal papers in sealed envelopes over a chain link fence onto the porch, which at times was my only means of conveying information, there were several meetings in the hot sun on the front steps with those big black carpenter ants crawling all over me. Since the ants crawling on her did not make her flinch, I persevered and mirrored her behavior…no small feat.

Point is, the “fruit of my labor” was my effort, and not “the satisfaction of my ‘client’.” In the end the woman was very unhappy to find that the proceeds belonged to all of the heirs, even though I had told her that at the onset. In the end the woman was very unhappy that an attorney needed to be involved in the distribution of the net proceeds. I charged a nominal fee, and in fact offered to handle it for free initially, but she would take no charity and griped about the nominal fee, both at the same time, which made not much sense. But then not much in this transaction made much sense.

Someone recently asked here what my highest achievements have been. I’d clearly have to put “selling the house of a homeless woman” on that list. I don’t know what she is doing now, but I am hoping she is doing what she said she would do, take the money and buy a little place in Virginia near her son, who was being raised by a relative and going to college there. I picture her there, being cared for by her son and relatives in a little house by a creek with a weeping willow tree. Clearly she was one of my most unhappy clients…and yet somehow, at the same time, one of my “highest achievements”.

Be proud of the fruits of your labor…be proud of your efforts to achieve those fruits, on this Labor Day 2006.

"I am Tiger Woods"

Posted on September 2, 2006 by Robbie

tiger-woods When I was at Inman, I believe it was Dottie Herman (although I realize that Altos Research attributes the quote to Burke Smith) who said “Technology won’t replace agents, agents with technology will replace agents“. Regardless of the source, it’s a great quote! That remark struck a chord with me. Except there’s one small problem… There’s not enough “real” technology vendors out there! Let me explain further…

OK, at one end of the Real Estate 2.0 spectrum, you have Zillow, Move, & Trulia. They use cool technology to sell advertising in the Real Estate market. Nothing wrong with that. Being a ‘softie alumni perhaps I’m a bit too set in my ways to fully appreciated the size of the opportunity these fine companies are going after. After all, MS only has a 10% share of the $500 billion/year enterprise IT market. But Google, probably only has a 1% share of the $3 TRILLION/year advertising market. Maybe those numbers are off, but it feels like a good Zestimate to me. Clearly there’s a lot money to made from the death of print media and these guys are at grave yard with their shovels ready. More power to them I say.

At the other end of the Real Estate 2.0 spectrum, you have HouseValues, HomeGain & others. They try to use technology to lure in and sell leads. It’s not my cup of tea, and some people don’t like them, but there’s nothing wrong with that business model either.

But where are the companies that use technology to just sell technology? When I look at the MLS search offerings of my future competitors like Birdview, Wolfnet, Superlative, Logical Dog, and literally a cast of thousands etc, I just cry and smile. The maps are non-existent or very Web 1.0-ish. RSS or KML? What’s that? Foreign langauge support? Is English considered a foreign language yet? Data Visualization? You gotta be joking. Page speed? Maybe if you measure performance with a calendar. And I haven’t even talked about half of the things I want to see or invent in a world class MLS search tool.

Granted, my game still needs a lot more work as well. Zearch is English only still, there’s more to data visualization than pretty Zillow charts, I really have no idea of how bad I scale yet (better than reply.com I hope, otherwise I know I’ll never hear the end of it), and I only support the NWMLS right now, but on the whole I’m feeling pretty optimistic about my chances on the pro tour.

Picture this scenario, here I am, John Q Homebuyer, getting my Zillow fix, Moving around the web, and being Trulia impressed with all this Real Estate 2.0 stuff, and then I click on your ad. I goto your web site, I wanna search for homes (because frankly that’s why people visit your site, unless you’re a famous blogger) and do you know what happens next? It’s reminds me of the guy going for a test drive in the new Volkswagen radio ads.

“This broker’s web site has 3 speeds, and this one is disappoinment. Web site, honk if you suck *honk* Take me to a RealTech or Caffeinated web site”

FYI – I’m leaving out RedFin because there are an exception to this generalization. They are a broker that has developed great technology in house and they are keeping it all to themselves (punks ;)). So most other brokers can’t really compete with them technologically speaking unless they partner with a technology vendor (like RealTech or myself).

I mean, we have all these “consumer portal” companies doing interesting work, empowering consumers, and then when I visit the broker’s or agent’s web site for the full story, it’s a total and complete let down. There’s over 1 million agents in the this country, and probably only a 1000 agents that have web sites worth visiting (I suspect half of which are regular Rain City Guide readers), and hardly anyone with compelling MLS search tools. It feels like all the good software engineers involved with this industry want to sell it an ad or a lead, instead of a killer web site. Maybe the industry needed a few well funded and very talented start-ups to smack it around to finally wake up and smell the software? (sniff, aaaahh, Firefox fresh scent, yummy)

Clearly there’s a big opportunity for developing a good MLS search tool for this industry. Maybe not Zillow, Microsoft or Google sized, but it’s big enough to make me interested in going for it. I’m pretty excited at the thought of all the possibilities, personally.

This is why I cry and smile. I cry because I feel my clients pain. They just want a cool web site to capture leads so they can get off the advertising & lead buying treadmill, and finding a good one is just about impossible. I cry because I feel the home buyers pain. This stuff should be so much better than it is. Many brokers have the money and are willing to do something about it, but it just looks like the current set of vendors serving them are developing products like it’s web circa 1999. I smile, because I’m in a position to do something about this. I feel like a Tiger. Here’s how I break things down on the links…

Jack Nicklaus is still winning most of the major tournaments these days, but he’s the one whose records I wish to break. RealTech has done some real nice work w/ John L Scott, CB Bain (did you guys do CatalistHomes? It looks like your work, but I don’t see your brand anywhere?). He has a few years of a head start over me, and is probably in process of making his other clients very happy. I hope that Zearch will eventually be as well regarded as the work you’ve done.

But after Jack, I can’t see anybody else out on the course improving their game. Maybe they are all down at the club house sipping some buds? Maybe they think the mine field of MLS downloading rules and methods will keep their market shares safe from technology disruptors (and to be honest, they are partly right – I wouldn’t be crazy enough to take this on if I wasn’t so convinced that I could build a much better set of web tools than most of the vendors I’ve discovered). Maybe they’ve never read Andy Grove’s “Only the Paranoid Survive“? But if this industry embraces RETS (or better yet, screw the SOAP and let me get dirty w/ the MLS’s SQL Servers), I suspect a few names on the MLS/IDX web site industry leaderboard will change.

But how can any vendor support all 900+ MLSes in this country! This is a monster challenge, even for a Tiger. We’re talking a 600 yard, Par 3 sized challenge here folks. Sorry, but even Tiger’s Nike golf equipment can’t par that hole. I’ll suspect I’ll just refine my game on the local links until I get really good. (If Dustin would only give me the connection string to Realtor.com’s SQL cluster it would all be so much easier. ;)) Oh well, if I gotta play the game one hole at a time, that’s the way I gotta play. Just keep making pars, make a birdie here or there, no bogeys, and watch the other players fall apart like a Sunday afternoon during a major. I dunno, but it’s starting to feel like the 2nd round of the 2000 US Open at Pebble Beach to me.

I’m working out, I’m going to a swing coach, I’m sinking my putts, I’m killing balls on the driving range, and more imortantly, I’m feeling a little faster, stronger, & smarter with each passing week. So all you other players, better step up your game. Tiger’s turning pro soon. Maybe not this year, maybe not next, but soon. And when he does, the game of real estate will not be the same.

Except for Jack, I wouldn’t worry about him too much. We’ve all seen the green jackets in his closet. 🙂

I know Ubertor’s got game, but I consider them more of a Michael Jordon type player. Great stuff, but he plays a different sport than we do. So Mr. Agent & Ms. Broker, are there any good MLS/IDX vendors out there whose game impresses you? (Other than Jack’s & Tiger’s of course?)

Everyone Run to Redfin!

Posted on September 1, 2006 by ARDELL

[photopress:run.jpg,thumb,alignright]I just got back from 200 1st Street in Kirkland and these are definitely all that I hoped they would be. Of course, I already know them fairly well and have been in there many times. But they were not available for sale.

Now here’s the VERY BEST USE OF REDFIN! In fact, I love these so much, I’ll make you the same Redfin deal. And you make out much better signing in as WITH AGENT than sans agent, as there is no benefit best I can tell, for those without. So you might as well get the 2% cashback.

For those who don’t know what the “Redfin Deal” is, you go over and sign in showing Agent as “Redfin, or assigns” or put my name, or any agent willing to give you the Redfin deal. But do NOT put “no agent” on that line. The field is wide open over there with only one sold. You get your pick of the litter, plus 2% back. DO NOT listen to the sales people, they are…and be careful on selection. Don’t restrict yourself to the ones they will let you see. Figure out the floor plan, as the very best deals are available to be bought, but not to be seen.

The price differential for positioning is off, so about 20% are real bargains and about 40% are overpriced. Get over there before they figure that out. When you write in your agent, or meet your agent there, the agent gets 3%, but according to the sales office, and I do not know why not, they are not allowing the buyer to take the 3%. So sign in your mother, brother or sister with a license…or me or Redfin, to take advantage of the cashback feature. Hopefully they will permit the buyer to take the 3% at some point without doing it this way. But in the meantime, don’t lose out on the benefit.

Yes, sometimes Redfin works. New construction or condo conversions, as long as you know how to factor in the location differential properly, is clearly the best use of Redfin. If you want an agent who knows how to factor in the price differential per location in the building…just throw my name on there and I’ll throw back the same 2% as Redfin (ONLY on these at 200 1st ST guys, not an open offer) since I live right up the street.

You know I don’t push everything, even my own stuff. And I clearly don’t like every unit in there. But with the field wide open through this weekend and only one sold…RUN!

Yahoo Responds to Our Questions!

Posted on September 1, 2006 by Dustin Luther

Based on my request for questions a few days ago, I put together a slew of questions for Yahoo to answer about their new real estate site. I must say that I was a little bit disappointed in the number of times they state “we can’t comment on future releases or upgrades”, but otherwise, I think there are some nuggets of gold in their answers. (Note that I also added a few questions in the beginning to get them talking about their service before I hit them with the agent-specific stuff. 🙂 )

1) What are the three best features of the new site?

1. Integration with Yahoo! Local & Maps:

Yahoo! Real Estate has added maps with satellite imagery so house hunters can easily see where homes for sale or rentals are located and their proximity to roads and other landmarks. In addition, integration with Yahoo! Local allows users to also see “inside information

The Rockford Files leads to "The Escrow Files"

Posted on September 1, 2006 by Tim

[photopress:Jimrocky.jpg,full,alignright]

For those of you who grew up in the 70’s, if you were like me and missed an episode of the Rockford Files, you were really bummed out. Missing the Rockford Files was almost as bad as my parents making me late for my soccer games. Not a good thing. Tivo, where were you?

Jim Rockford (James Garner), what a guy. He always seemed to get into a pickle and get out of it. That Pointiac Firebird of his; all my friends wanted one, even if it meant riding my dirt bike to the store and buying a $2.50 model of it and putting it on my dresser. That was good enough for me. Those humorous one liners with “Angel,” brings back lots of great memories. The humor reminds me of some of the things we have come across in the world of escrow. In escrow, if you can’t find any humor in the business, it will eat you up.

Rather than send out mundane APB’s to our entire client base about issues that come up or tips based upon transactions that go haywire, we think that adding humor into the fold has more impact and can also be helpful to our Realtor customers in providing better service and foster smoother closings for their clients.

For example, escrow companies are extremely busy at months end and the phones ring constantly. It’s hard to get work done when you receive phone calls from nearly every party, sometimes two or three times in a day, asking, “is it closed yet?” So, to help reduce stress at month end, we started a “counting” system where we tally the transaction with the most phone calls asking, “is it closed yet?”

We made the question, “Is it closed yet?” into a funny YouTube video parody skit, starring our kids who play the Realtor, the buyer, the seller and loan officer. The movie series is called “The Escrow Files.” This Fall our series will be both print and video.

Since the month ended yesterday, the transaction with the most “is it closed yet” calls was nine! For perspective, if our small office closed 30 purchase transactions this August, you get a good picture of all the people calling: buyers, sellers, agents, loan officers, funding depts, etc….on just one deal…now multiply by 30. Maybe we should get another number from Verizon dedicated as our “Is it closed yet?” hotline!

To tickle your funny bone here’s a sample from this year’s, The Escrow Files:

Written on an “Addendum” during 2nd quarter 2006: “Buyer to walk through house prior to closing.” Didn’t they do that already, like many times?

Lowest earnest money amount winner ytd: $200 cash. Wow.

“Should I stick around for you to cut my commission check?” –agent with clients who just signed their loan docs and the deal won’t close for another week.

Stay tuned for more and have a great three day weekend! We are looking forward to the day off!
Tim & Lynlee

The last seven days in Real Estate

Posted on August 31, 2006 by ARDELL

Last week of August. Who bought what, where and for how much? Typically a slow week with agents and clients taking some time away with their families before school starts.

[photopress:v.jpg,full,alignright]This is my absolute favorite property that sold this week, in Sammamish for almost $4,000,000. Going home there is like going on vacation every day after work. My definition of “sold” in the last seven days, for this article, is STI or PENDING…people “making decisions” to purchase.

Seattle under $300,000 – 38 people, between $300,000 and $400,000 – 66 people

70 people in each for the $400,000 to $500,000 range AND the $500,000 – $600,000

Then we really drop off to only 20 from $600,000 to $700,000, and then half of that at 10 from $700,000 to $800,000, half that again to 5 at $800,000 to $900,000, and 3 in the $900,000 to a million.

15 from $1 million to $2 million and two just over $2 million, one in Broadmoor and the other a tudor in Denny Blaine.

On the Eastside I used, Bellevue, Bothell (King County), Kenmore, Kirkland and Redmond.

Only 5 under $300,000 this week. 75 between $400,000 to $600,000. 4 between $2 million and $3 million vs. only 2 in Seattle, and about 10 in most other categories.

So all tolled on both sides of the Lake, most homes this week were sold between $300,000 and $600,000. That includes condos, townhomes and single family homes.

Fits into the theory that the average buyer is at $450,000 give or take.

Russ, NO! Please Say It Ain't SO!

Posted on August 31, 2006 by ARDELL

[photopress:joe.jpg,full,alignright] One of the FEW rights of a buyer these days, is that they have 3 days to review the “Form 17” Seller Disclosure Form.

These forms are often sitting out at the homes when buyers view property, and often buyers pick them up at every single house. Recently the mls system has made these available online, so we can send them to our buyer clients, before they even see the property. A buyer could conceivably recieve 20 or more Seller Disclosure Forms, before even deciding on a property.

The first page of the Seller Disclosure Statement says in all caps: “You (buyer) have 3 days from the day seller or seller’s agent delivers this disclosure statement to you, to rescind the agreement.”

Some agents are suggesting, that every single buyer who has picked up a Seller Disclosure Form in a house, and now possibly weeks later makes an offer on that same property, has given away their 3 day right to review it! They had it in their hand weeks before they were even interested in making an offer, but the clock started ticking the day they picked one of these forms up while looking at property? Is that even remotely possible?

Please say it ain’t so! Otherwise get those darned things out of those houses and off the online access! What a TRAP! Please say it ain’t so…please. Russ, your thoughts MUCH appreciated. Seems to me that if a buyer has “3 days to rescind the agreement” that there has to in fact BE an agreement at the time of delivery!

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