Back at MindCamp, Stewart Maxwell of Seattle Real Estate Talk recorded a podcast featuring me and Galen Ward discussing our ideas behind real estate technology.
While you’re on Seattle Real Estate Talk, check out their new layout. It’s very tight and I love the updated header graphic!
UPDATE
I just noticed that Galen wrote a little something about this podcast on the ShackPrices blog.
Generally I have an issue with most real estate books as they are usually advise on how to make a million dollars in 90-days or some similar hype. So it’s refreshing to come across the few books that are sound, practical advise on investing in real estate. The latest that I’ve read that fits into this practical advise category is The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges.
Let’s face it, with high vacancy rates and low rents, multi-family hasn’t been a great place to invest the last few years in the Seattle area. But with the increasing prices of entry level homes, number of condo conversions removing units from existing inventory and the increased interest rates the rental market is seeing renewed demand. So where do you invest and how do you analyze the deal?
That’s why I like this book. Steve Berges doesn’t promise to make you a millionaire overnight. Instead he lays out tax planning, case studies and financial analysis examples that help you develop some investment strategies. I was a finance major in college, plus several years at Microsoft brainwashed me with the metrics mantra — if you can’t measure it, it doesn’t matter. So I really appreciated the financial analysis part of this book. Sample spreadsheets on how to calculate different ROI scenarios and determine the best investment among several properties.
This isn’t an exciting, feel-good rich dad, poor dad type of read. It’s practical advise on how to get into the game, analyze your investment and calculate your exit strategy. For anyone contemplating multi-family investments, I highly recommend this book.
One last note — don’t spend useless hours trying to recreate his spreadsheets from the book. I wasted several hours on that before realizing the obvious — all his analysis tools are available on Steve’s website www.thevalueplay.com
[photopress:Seattle_Real_Estate_Guide_3_20_2005_11_44_34_AM.jpg,thumb,alignright]Merv makes some great points about the importance of style in blogging. (He hits the nail on the head when he says Curbed “makes me dizzy…”).
Here are some tips I would add to the discussion:
However, at the end of the day, don’t lose sight of the fact that substance is what keeps readers coming back for more! In other words, I continue to visit the Property Grunt on a daily basis despite the fact that he has never modified his theme. Content counts more than style!
[photopress:lake.jpg,thumb,alignright] The higest value attributable to the view component of a property, would be “an unobstructable panoramic view”. The lowest, would be a potentially obstructable “peek”, or a “winter view” meaning the view is totally blocked by deciduous trees, and the view only appears when the trees shed their leaves in winter.
The value of a view is built in layers. The value of the lot, with no house on it at all, contains the first layer of view value. Some people are amazed when they see a property with no view at all, that is practically falling down, valued at $800,000. Who would pay that? If the answer is that no one except a builder would pay $800,000 for that “house”, then the house becomes a “tear down”, as the “value is in the lot”.
How a house is constructed, and the positioning of the rooms, and the windows in those rooms, is ultra important to its value. Especially here in the Seattle area. If the best views are from outside on a deck, then the value is diminished to the number of days in a year you can be outside to enjoy that view. If the best view is from “all main rooms”, meaning those rooms where you spend most of your time and do most of your entertaining with guests, the value will be higher than if the best view is from a little “cozy art studio” perched high above the main living areas. If the view is only from a bedroom, the house will be worth more if the builder puts the master bedroom in that view corner, rather than one or two, or even all, of the “odd” bedrooms.
Then you have the “bad” side of the street and the “good” side of the street. For instance here in Kirkland, the Market Street side of 1st Street will have a lesser value than the opposite side of the Street, particularly in those blocks where the opposite side is higher…much higher. The noise factor from Market Street and the ability to see traffic going by at a steady pace, detracts from the value of the view, even if the long distance view is pretty much the same from both sides of the street. The house on the “bad” side of the street, blocks the view of Market Street from the “good” side of the street, so that house being there, adds to the value of the property across the street.
If all of the properties in your view have already been built out to max height, the value is more likely to be retained long term, than if all of the houses, between your house and the view, are older ramblers that could potentially be built up to max height. So when you look out the window, don’t just look at the view. Look to see if most of the homes, between you and the view, are newer construction at “max height”, or “tear downs”.
What is “max height”? You can do a quick and fairly accurate determination, by spotting the newest houses in each level of slope between you and the view. Construct a “view viewer” with your hands (thumbs together and palms up, the way movie directors used to do to construct a facsimile “frame”), and move your hands from the height of the newest house, scanning over the entire landscape in your vision. This is one of the cases when Zillow can’t value a property for you, because Zillow has no hands! LOL
When it comes to view…do not make the mistake of basing what you will pay, on “what you see is what you get”. You have to determine the long term probabilities of view retention. Don’t expect to be told by anyone that the view “may” at some point in the future, be obstructed. You are pretty much on your own in that regard, as what “might” happen to your view is usually not a disclosure item, unless the neighbors have already pulled permits to build. Even then, I have yet to see a property flyer say, “This great view is going to be obstructed by a condo complex going up sometime next year”.
All that being said, for a view-oriented person like me, a home with a view is indeed “priceless”. Waking up each morning to see the Seattle Skyline across Lake Washington, AND Mt. Rainier to the left, brings a joy to my life that is hard to place a “value” on. But being a real estate agent, I can place that value, and for my house it was $50,000 when I bought it, and hopefully will be $250,000, after I finish enhancing certain features to capture more of the view’s value.
So to Mr. Freakonomics, who asks “Why do agents get more for their homes than other people”? Maybe it is because we tend to choose homes where a seller “left money on the table”, and then make those minor changes that capture value, before we sell. Always choose an agent that helps you make the same kinds of decisions that they would make, if they were buying or selling the property themselves.
Richard Nacht of Real Blogging asks “Where are da blogs?” in his discussion regarding internet lead generation.
I thank him for the segway to a post I was preparing to write today.
Back in February I wrote three posts: Bottom Feeder Sites, Using the Internet to Buy Your New Home and Redfin-Something to Thing About. Since January, when I began “writing for” Rain City Guide, I have been running an experiment based primarily on these three posts.
A) Bottom Feeder Sites – My contention was/is that if an agent didn’t pay for leads to a Bottom Feeder Site, there would be more monies at play into the transaction for the benefit of the consumer. I am pleased to report that at present, the consumer direct benefit, so far, is running at 3.43 times what I would have paid to House Values during that same period of time. That is with only 4 closed transactions of participants in the experiment. Clearly the consumer is winning as of this date.
Bottom Feeder Sites $0 – Consumer $3.43 X total 5 mo. cost of HouseValues (plus $29,500 in direct seller to buyer concessions.)
B) Using the Internet to Buy Your New Home – In a stellar example, see As Good As It Gets post, the consumer hit a trifecta!
1. Using the “STI method” noted in that post, I found the house within hours, using the STI as the bogey and going one stroke over par.
2. Using the “peek over the price” method noted in that post, I found a house he had missed using the internet as a home search tool, and he saved $25,000 at the same time, at least $10,000 of which was money “the seller left on the table”. Clearly a rarity in this market.
3. He also participated in the $3.43 x the 5 month cost of HouseValues benefits noted in A) above, his single cash to close benefits exceeding the entire cost of 5 months of House Values alone.
C) Redfin-Something to Think About – for me this was the most exciting of all, in that it accomplished something I have been working on since 1998. A meeting with a buyer that replicates meetings agents have been having with sellers since the beginning of time. This one is hard to explain, since it is still “playing out”. The meeting I had yesterday with a buyer consumer, was as close to being the same as “a listing appointment” as I have ever had. Buyers and Sellers having equal footing in the marketplace, has been my “Crusade” for so long, I can barely contain my elation!
So to Inman, and our nomination for “Most Innovative Blog”, I would like to point out my contribution to the Innovation of Rain City Guide. That is to utilize the zero cost (in dollars) component of blogging, to directly benefit the consumer and promote TRUE buyer empowerment as opposed to PERCEIVED buyer empowerment.
Clearly breakthrough stuff going on here at Rain City Guide…the experiment continues.
Yes, I am tardy with my report for Day 2. There was not much going on from an interesting meeting standpoint so I visited the tradeshow floor. For anyone that has not been to a Realtor tradeshow, it is certainly an experience. Flashing buttons, contests, people throwing free things at you. Having been to many of these, it always amazes me the types of companies that have booths. For example, there were several jewelry and makeup booths. While I am not a woman, it seems odd that they would come to a real estate tradeshow. It would be like having Titleist as a vendor. Lots of real estate guys like to play golf but they don’t really fit at a Realtor tradeshow. Then again, I am pretty dense about this stuff and they seemed to have a bunch of women buying stuff so I guess they are the smart ones.
I visited a bunch of booths but a couple stood out for different reasons:
Realtor.com – They intro’d a Zillow/HouseValues-like feature on their home page called “What’s Your Home Worth.” It is a lead generation system for agents that provides basic home value data and then let’s the consumer elect to get more refined info if they want from a “featured” agent. Agents can buy territories and they apparently will rotate as consumers access the feature. Once a consumer asks for more info, the “featured” agent will get an email and that consumer will see the particular “featured” agent for a period of time each time they return. With the large amount of traffic that R.com gets, it will be interesting to see how well the lead gen system works. I tried my zip code and there was already an agent signed up! I think this will be a winner for R.com and the agents that jump on it but I also think that agents will squak when their choice area is sold out.
HomePoint – This is a Trulia-like company (although the get data via the MLS directly) that is trying to become a portal of sorts. Agents sign up for territories and get “featured” when a consumer clicks on a listing. Again, this is a lead-gen system for agents that even extends to listing agents and FSBOs. The thing that I did not get was how they were going to generate traffic. No eyeballs, no leads.
More later….
Russ
Robert Scoble (the excellent Microsoft blogger) has been writing about the pain of watching his mother die.
One of the things that shocked him was that even while he’s describing these events, people are still sending him PR pitches for new products. He follows up these comments by saying he doesn’t mind receiving product pitches, however, the people need to read his blog and be current on his situation if they expect a response.
He’s making some interesting points that are very relevant to real estate blogging… Always remember that there are people behind the blogs. Real estate is such a “people” business, and yet, when people get on the internet they sometimes act like they are only dealing with computers.
Before you pitch a product, website or service (either via comments or email) remember that it is not a computer reading your pitch but a human being. Write something that demonstrates you’re interested in the person’s writing.
Personally, I receive so many emails now that I couldn’t possibly respond to them all and still handle a full-time job. However, getting me (and just about every blogger I know) to respond is quite easy… Write something that shows your interested in their thoughts or opinions!
The New York Times has a story about Major League Baseball’s lawsuit aledging that use of MLB’s statistics and player names in fantasy leagues is infringing on major league baseball’s mojo (look and feel?):
“What a company like CBC is selling is not nearly a repackaging of statistics,” said Lee Goldsmith, a lawyer for Major League Baseball Advanced Media. “They’re selling and they’re marketing the ability to buy, sell, draft and cut Derek Jeter, Alex Rodriguez, Albert Pujols. And part and parcel of the reason that people are willing to pay for that ability is the persona of Jeter, of Rodriguez, of Pujols.”
The Washington DC MLS (MRIS) recently issued a couple of reports urging agents to consider statistics like list price to be copyrightable (Russ doesn’t agree with this analysis, follow the link to see why), but in the world of baseball, the decision has already been handed down:
Major League Baseball Advanced Media is not making a copyright claim to the statistics themselves; a 1997 decision in the United States Court of Appeals involving the National Basketball Association ruled sports statistics to be public-domain facts that do not belong to the leagues.
Perhaps the MRIS should look into hiring the MLB lawyers when they’re through with the case. By that time they’ll be experienced at explaining the difference between statistics and “right of publicity”:
Rather, the central issue concerns celebrities’ ability to control use of their names in commercial ventures, and how this “right of publicity,” which has developed under state common law and statute over the last half-century, may commingle with Constitutional press protections under the First Amendment.
Interestingly, the NWMLS is now allowing agents to list sold data on real estate websites.
Along these lines, Shelley Rossi, the Director of Public Relations for John L. Scott, emailed to let me know that John L. Scott added a comparable market analysis tool to their home search Robbie discussed last week…
There are two ways to access comparable sold property information on JohnLScott.com. The first is by address, which can be refined by entering property characteristics, such as square footage, bedrooms, bathrooms, etc., and the system will identify the ten closest “sold homes
I just attended my first meeting at the NAR Mid-Year. It was the MLS Association Executives Committee Meeting. There were three presenters to the group and I will provide some highlights of their presentations.
Laurie Janik, NAR General Counsel
Laurie indicated that claims against MLS under the NAR EO Insurance Policy have for the first time surpassed the number of general association claims. Out of 32 claims made this year, 18 involve MLS issues. Of the 18, 8 involve the FTC, 7 the DOJ and one involves a state attorney general. Most of the claims revolve around whether an MLS can exclude Exclusive Agency listings from data feeds to third party websites (e.g. Realtor.com). Since Exclusive Agency listing allow the seller to sell the house themselves, MLSs argue that allowing these listings to be displayed on the Internet basically enables the seller to have free advertising to attract a buyer without paying the listing side of the commission.
Laurie also discussed the DOJ lawsuit. NAR filed a motion to dismiss which raised three arguments:
First, that the DOJ is seeking injunctive relief for the VOW policy that has been rescinded and never implemented and as a result, there is no relief that can be granted under this claim.
Second, that the VOW Opt Out provision is neutral on its face, there is a presumption of cooperation and that decisions to Opt-Out are based on independent action of each broker.
Third, that the DOJ’s claim against the current Internet Listings Display Policy does not allege any anti-competitive effect.
Laurie cautioned that Motions to Dismiss are rarely granted in the 7th Circuit (where the suit is pending). She also said that 14 MLSs have been involved in DOJ subpoenas and that the NAR insurance coverage for this claim is gone so the MLSs that are involved are now spending their own money to respond to the subpoenas.
Lastly, she indicated that there was a productive settlement conference. She believes a key issue in the case will revolve around the MLS definition of “Participant