Category Archives: Seattle Real Estate Stats

Faster than fast, Quicker than quick, Ka-chow!

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While spending quality time w/ the Cars addict in my family (the 3 year old who says “I wanna see the race car movie Daddy”) got me thinking about something that moves faster than Lightning McQueen, the relentless march of high technology.

A couple weeks ago, Real Central VA, had a link to an interesting NAR Center for REALTOR Technology survey on what agents/brokers plan to spend on technology.

Some of the more interesting findings were

  • 95% of agents use digital cameras
  • 90% of them use cell phones
  • 77% of them use PCs
  • 71% have web business sites
  • 60% of agents have IDX search features on their web site
  • Sites with IDX listings generate more leads than sites without listings.
  • 30% of agents spent more than $2000 on technology in 2005
  • Less than 15% of those participating in lead generation programs are satisfied with the results.
  • 67% of agents want their broker to expand their technology offerings.
  • 84% of agents want the MLS to expand the technology and service offered.
  • Most internet leads come from broker web sites or agent web sites
  • Realtor.com was the 3rd largest source of internet leads
  • The Internet is the third most important source of leads (after referrals and repeat business), it is surprising that the majority of agents spent less than $500 to build or maintain their website, and that a super majority of brokers (67%) spent less than $1,000.

The net take away for me was that agents and brokers have an appetite for technology second only to MindCamp attendees, and yet the vast majority of them probably spend more money at Starbucks in given year than they do on their web sites! Given the importance of internet leads, the effectiveness of broker / agent web sites in capturing them, the disappointing effectiveness of lead generation problems, and appetite for more technology it seems to me that the industry on a whole is seriously under investing in technology. There are exceptions of course, but it seems that real estate tech spending is going to have to trend up. Otherwise the tech leaders around here, both inside & outside the industry (RedFin, John L Scott, CB Bain, Zillow, Trulia, etc) will increasingly make real estate professionals look like real estate amateurs.

So where are your tech dollars going in the next year? How much do you plan on spending? How will technology change how and where you use your marketing budgets? More Zillow, Craigslist, and Google ads, and less paper-based ones?

Zillow's Free Advertising – A Consumer Perspective

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[photopress:warning.jpg,thumb,alignright] Before everyone jumps into the pool, every agent and owner must “LOOK before they LEAP”.

The Zillow Zestimate WILL appear, of course, in the same space as your “Property For Sale” listing. The printed data is also picking up the erroneous square footage info and number of bedrooms and baths from the tax records. So far it would appear that the owner can edit this data, but not the agent for the owner. Still playing with that.

Clearly, no agent should be listing a home where the Zestimate is less than the Asking Price, without first consulting with the owner, as I did last night BEFORE 9 p.m., having seen the proto-type last week. I am not particularly alarmed by this variance, but clearly the Zestimate being higher, rather than lower, would be a PLUS! 🙂 Attempting to turn a blind eye to the Zestimate, by not posting your home for sale there is no answer. Not here in the Seattle area where 82% of the buying public is likely to have seen the Zestimate, whether you invite them to do so or not. Seattle PI: “The company’s internal numbers (Zillow’s) indicate that 3.2 million people visited the site in November and that 82 percent of all homes in King County (WA) have been viewed on Zillow in the last 10 months.”

It is quite possible that the whole valuation process will pull in the direction of Zestimates, particularly in areas like ours with so many tech savvy buyers. In fact, I am already seeing a move in that direction for many properties on market and ones sold recently.

Whether or not you choose to post your home for sale on Zillow.com, these are issues facing everyone involved in real estate transactions. Buyers are making offers with the Zestimate price. Sellers and Agent’s for sellers will need to learn how to calculate the variance with some level of credible accuracy.

One of the reason’s David G. and Jeff, of Zillow, my parter Kim and I, met last week to review the new product, was to view first hand some of these potential pitfalls. While I did notice the Zestimate vs. Sale Price issue, the square footage discrepancy did not pop out at me during the presentation.

“Supporting New Business Models” and being an “Agent for Change” requires that someone jump in first to test the waters and assist with these little blips from the getgo, and not without the owner’s permission to do so.

To Galen, who notes that it is difficult to simply load up listings en masse, perhaps this is fair warning that adding a home for sale should NOT be done en masse. Every agent and every owner must consider the potential consequences of showing the Zestimate price side by side against their Asking Price, and be prepared to justify the basis for the differences between the two with regard to square footage, number of bedrooms and bathrooms, finished vs. unfinished space, etc. and price.

This “FREE ADVERTISING” and the info contained “in the AD” is not entirely editable by the owner and the owner’s agent…so far anyway. I’m still working on it. Not a small matter, and one that must be addressed rather quickly if Zillow’s erroneous data is going to show side by side the owner’s “corrected” data.

So what did I forget to ask David G. last week? Did Pearl Harbor Day come up in any conversations concerning Zillow’s choice of unveiling the new upgrade? Did unveiling it at 9 p.m. on the 6th, camouflage any refererence to December 7th, when most would be waking up to see “God-Zillow” in their sheets with the morning paper?

Escrow agents and how they protect themselves

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When you choose an escrow company (or “closing agent,” the person who does the work necessary to close the transaction), you look for several qualities: competence, service, location, etc. One factor you probably don’t consider is whether the escrow company is willing to be responsible for its own significant errors.

When escrow is opened, the closing agent sends both buyers and sellers a copy of its standard escrow instructions. These instructions supplement the purchase and sale agreement and instruct the agent as to how the transaction should be closed. There appear to be only a handful of templates used by the many different escrow companies, as it is very common to see the same set of instructions regardless of the escrow company. In the vast majority of those instructions (perhaps 85-90%), there is a little-noticed sentence, typically in the “Disputes” paragraph: “The parties jointly and severally agree to pay the closing agent’s costs, expenses and reasonable attorney’s fees incurred in any lawsuit arising out of or in connection with the transaction or these instructions, whether such lawsuit is instituted by the closing agent, the parties, or any other person.” The exact language of this sentence may vary somewhat, but the gist is the same: if anyone sues the closing agent for any reason, buyer and seller will be responsible for the closing agent’s attorney’s fees and costs.

The effect of this language is to insulate the escrow company from any liability that arises out of the closing agent’s negligence. Say, for example, the closing agent neglects to pay off an existing lien on the home. When buyer takes title, the buyer will now have to deal with this lien that was incurred by the seller. A reasonably prudent closing agent would have insured that all liens were satisfied at closing, and the agent’s failure to do so probably constitutes negligence. Under normal circumstances, the agent (and escrow company) would be liable to the buyer for the harm caused by this negligence. However, if the instructions contained the above language, the agent almost certainly will avoid liability. Why? Because if buyer were to file suit against escrow in this situation, buyer would be responsible for paying escrow’s attorney’s fees and costs in the lawsuit. As anyone who has used an attorney to defend them in litigation knows, attorney’s fees can be very, very expensive. Thus, the above language is an incredibly strong disincentive to seeking compensation from escrow, even in those instances where escrow’s negligence causes harm. I believe this is simply not fair to the buyer and seller.

In my experience, most (but not all) escrow companies are willing to modify the above language so that it does not effectively bar a suit against escrow based on escrow’s negligence. It’s certainly an issue you may want to address when deciding which escrow to use in your transaction. Needless to say, an attorney can quickly negotiate a change in these instructions on your behalf. [This post does not constitute legal advice. Consult a lawyer regarding your particular situation.]

The "BIGGER" news on Zillow.com

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[photopress:boycott.gif,thumb,alignright]I was intrigued by Kevin Boer’s comment on Galen’s post predicting that the Major Brokerage Houses would be jumping in en masse and posting their listings on Zillow.com. Kevin predicts that it will be “the little guy” who will hold out. I predict it will actually be the other way around, with the bigger players finding an excuse NOT to post their listings on Zillow.com. Time will tell.

In my link post to all of the blog articles on Zillow’s overnight make-over, I found this obscure post which says what others are not saying:

“RED ALERT” Zillow Wants Our Listings. Before anyone posts their listings on Zillow-let’s get a consensus. I don’t want to aid these people at all, and by posting your listings, you are doing the legwork for them and I think it is a comakazie move. Before agents gang bang the free listing, maybe we can vote on this as a whole. What do you think? They’re not Realtor’s, so this is not an anti-trust violation, is it?”

Joanne Brown of Keller Williams, who wrote this blog article, tread on the thin ice others knew not to step on. But that’s the beauty of blogs. Every once in a while, someone just “let’s it all hang out” there in the blogosphere.

Zillow's new way to spite your neighbor

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Mix Zillow’s amazing capacity to quietly market itself and its new feature (list your home on Zillow, FSBO or FSBAgent) and you have a great new service for driving traffic… to your annoying neighbor’s house. List their house at 25% below Zillow’s estimated value and invite people to come by to see the place anytime after 8 on weekdays. You could alternately ‘claim’ their house and hold it until they decide to sell, at which point you get to choose the price, at least on Zillow. To be fair, listing someone’s house has always been possible on Craigslist, but you never had to send in proof of ownership to be able to reclaim your house from them.

More seriously, I’ve been expecting Zillow to launch a service like this for quite a while, but frankly I thought it would take them a little bit longer to get their act together and figure out exactly how it would work.

A few thoughts:

1. Zilllow is making it a pain to bulk upload listings, which gives FSBOs exactly the same capacity to list as the biggest companies. They’re doing this for two reasons: Individuals are more likely to list (and look at ads and puruse the site) if their agent doesn’t say “we automatically list so you don’t have to worry” AND because it makes it harder for competitors to get the same information. If they allowed bulk submit, third party websites would do most of the work posting listings to all the free listings sites on the web. (So Greg, I disagree with you here) Expect an API for listing if people aren’t listing in high numbers (see number 3).

2. Many consumers already believed that Zillow had houses for sale, so this revelation won’t surprise the real estate-casual public.

3. 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 of them seem to have hit the point of no return: the point at which searchers start using the site exclusively, causing any remaining listers to clamor for inclusion. Based on the marketing buzz alone, Zillow may be the first to hit this point. Once (if?) they hit some critical number (70%? 80%? 90% of listings?), the tide will turn and nearly all holdouts will list themselves. They can always include an API to increase inclusion, but I think they’d rather have agents and consumers list manually and add more information to their Zillow listings.

4. Zillow almost has enough buzz to get the holy grail of online real estate listings – actual people listing their own homes en masse and actual searchers using a non-MLS based site. Uninformed home buyers will probably use it to search for homes until they realize that, at least in the short run, Zillow doesn’t have a bunch of the houses that are for sale.

5. Many local MLS systems will probably fall by the wayside as the primary places that agents and consumers go to search for houses. This is because most of them have too many rules and regulations for using their data, which binds the hands of innovators.

6. Is ‘Make Me Move’ basically a slow motion auction with no end date? You state a “buy it now” price and wait for bidders to inch up to that price? It seems like a surefire way to see get a bunch of homes, but you never know if you’ll find that gem in the rough. It certainly won’t work for commodity-like homes in suburban developments or condos unless the “buy it now” price is really close to the market price.

7. Agents, you’re kidding yourself if you believe that Zillow isn’t going to make your life harder. When anyone can list their home on the web without paying $500 to some brokerage, it’s time to offer real services or get out of the game. Also, if people know someone who has successfully done a FSBO, it’ll seem a lot easier for them to do the same.

Agents and brokers of the future, you’re also kidding yourself if you believe that Zillow is responsible for shrinking commissions (they’re coming) and a changing industry because it’s not: Zillow is just the product of the web’s relentless market and information opening power. We are leaving the time of the agent-leads-consumer model in the real estate industry and we are entering the time of the agent-coaches-consumer model. More on how I hope to participate in this change in the coming weeks and months.

Update: I suspect Zillow will allow for bulk uploads in the future no matter what, but it makes sense to take things like this slowly. They will need to be especially vigilant to keep out listing spammers who could use an API to upload dozens of false homes.

Blog Articles on Zillow's New Upgrade

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While Zillow is choking over there on the side trying to digest my listing info, here are some links to everyone I can find who is talking about tonight’s big news on Zillow.com

I threw in a couple of recent articles, posted just before tonight’s big news, that I found to be of interest. I will come back later and keep editing this post to include all articles posted until everyone is talked out.

Zillow.com says "MAKE ME Move"

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[photopress:logo.gif,thumb,alignright]LOL, it’s going to be one of those fun days on the Internet. It really has been way too quiet, except for Greg’s Bubble War, so I’m glad for a little excitement.

At 9 p.m. PST, Zillow is unveiling their newest major upgrade which allows both consumers and agents to upload their homes and listings…apparently, whether they are for sale…or not! This is going to be fun.

I’m planning to be one of the first to get a house in there before the East Coast wakes up. Let’s see how easy it is and whether or not it works yet.

There will be For Sale by Owners side by side with Agent Listings and a place for what we in the industry generally call “Pocket Listings”. People who might move, if you offered them a price that would make it worth their while to get out. That’s the fun part. Not that Zillow.com hasn’t already been a lot of fun as it is.

One interviewer today from L.A. asked me if the “Make Me move” category would really be of value to anyone who didn’t have a very expensive and unique property. I think it will be a great opportunity for people who cannot list their home for sale right now, but are planning to move sometime in the near future. People who are going to list their home in the Spring. People who are going to move when their child graduates from high school in June. People who will be listing their home when they reach their two year ownership requirement to avoid capital gains taxes. Pretty much anyone who is not quite ready to move right now, but would like to say to the public at large “Make Me move!” at x price, and then we’ll talk about when I’m willing to actually get out 🙂

So it should be a very exciting day. I’m off to see if I can upload a listing.

Some SEO changes

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Back at the Blog Business Summit, I asked Dave Taylor what I could do to improve my ranking in some of the “other” search engines… It seems that over 90% of RCG search engine traffic comes from Google and while I appreciate the traffic from Google, I would like a little love from the other search engines as well…

[photopress:seo.jpg,full,centered]

Dave’s advice was simple, and since the changes are not default in WordPress, I thought I’d pass them along to others…

1) I flipped the Blog Name and the Post Title around… The title (way up above the address bar!) for this post is “Some SEO changes by Seattle’s Rain City Real Estate Guide”. Before I made the change, the title would have been: “Seattle’s Rain City Real Estate Guide >> Some SEO changes.”

2) I added meta keywords and meta descriptions. To figure out good keywords, I did a few common real estate searches on Google AND Yahoo and then stole (borrowed heavily) from the sites that scored well… Here are the meta tags I ended up adding:

  • Keywords: Seattle Real Estate, real estate blog, real estate guide, Seattle real estate blog, Ballard, buying, selling, research, neighborhoods, Seattle neighborhoods
  • Description:Seattle Real Estate Blog, Seattle Washington’s complete website for real estate, homes for sale and virtual tours. Search for Seattle Real Estate neighborhood information.

(You can see the implementation by “right-clicking” on this page and selecting “view page source”… Also of note: all of these changes were made directly to the header.php file.)

I’ll give it a month and let you know if these simple changes have any affect on the other search engines!

A Few Kind Words for one Merit Financial employee

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Rather than jump on the bandwagon of the negative press regarding the Merit Financial failure(s), I’d like to tell my one and only Merit Financial Story.

One of our agents had a client who was using Merit Financial as their lender. When someone we meet has a pre-established lender relationship, especially a personal relationship…friend/relative, we do our best to support that relationship. Unfortunately, as the newspaper articles have highlighted, the loan rep was a young fellow with no lending experience who had never handled a loan that was a purchase, rather than a refinance. Two weeks into the 30 day escrow, it was apparent that absolutely nothing had been started with regard to the financing. The agent didn’t know what to do and came to me for advice.

I told her to get into the car and I made my one and only ever visit to Merit Financial. We had no appointment. I call it “camping out”, meaning “we’re not leaving until we get someone here to start paying attention BEFORE it is too late.” A young man by the name of Kris Quigley took full responsibility from the time I left that building, until everything was resolved, and escrow was closed. He worked day and night. He was literally working so hard that he made himself sick and ended up with pneumonia. He called me well into the night past 9 p.m. and I’m sure our client was not the only file he was bailing out of a fire.

My guess is that for every 20 people hired, who were mostly all talk and no action, there was at least one Kris Quigley in the background busting their butt to pick up the slack.

Kris…wherever you are…I wish you the best of luck in your future endeavors. I feel badly for people like Kris when I read these articles. Clearly not everyone who worked at Merit Financial was a Know-nothing slacker, as these articles would lead people to believe. Kris, feel free to use me as a reference if you need one. Hopefully you moved on before the $ hit the Fan.

Real Estate and Ethics: Collision or Harmony?

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The “Party is over” for local company
Elizabeth Rhodes of The Seattle Times reports on the rise and fall of Merit Financial in today’s Sunday paper. Ironically, it is not in the real estate section (it should be) but the business section— a full page article, above the fold.

I encourage everyone who is in business and those not already aware of the demise of Merit Financial to read the article in Sunday’s paper. I grabbed the bulldog edition and read through it taking away several points and add a couple personal suggestions:

  • It is critically important to know who you do business with.
  • It is of equal importance to understand (as much as possible) the financial foundation with those whom you entrust your clients. Will they be here today and gone tomorrow? There are several ways to get a general snapshot of this legally and unobtrusively. It has saved me more than once of going into business with others who have a poor track record or are saddled with debt. Debt and escrow trust accounts are a disaster waiting to happen.
  • Success is not necessarily defined by owning designer shoes, clothes or driving Hummers, Porches, Mercedes, BMW’s or living in a McMansion. I think we all have our experiences of knowing a multi-millionaire or two who drives a modest car, shops at Goodwill or is found handing out $100 Bills to surprised people in Chicago, as was the case last week.
  • Worry about your very last customer’s experience and service satisfaction, not the trappings of the paycheck. Income will only follow if you are passionate about providing great service at a great price, in that order.
  • If the focus is only on the paycheck, increasing that yield spread premium, or making a “deal,” your customers will see right through you, sooner or later. It shows.
  • Fundamental real estate knowledge coupled with the experience of having a great support structure around you will lead to satisfied customers and foster long-term business relationships.
  • Make it a point in 2007 to surround yourself with real estate professionals in your support structure that may know more about their expertise than yourself. It is not necessary to be an expert in every arm of real estate. There are great loan officers, excellent escrow and title staff that are eager to assist you with your questions. The more I hear “I’ve been in this business x amount of years and I’ve never heard of escrow doing such a thing or…..(insert your own verbage)…. the more we know it is a dead giveaway that posturing is taking place and what is meant is “I don’t know.” There is much to gain and everyone learns more collectively if there are less “I know it all” personalities. What is sorely needed and refreshing to hear is, “I have never run into this scenario, please help.”

Escrow closes the door on a closing

Every real estate practitioner has had the opportunity to work through an ethical dilemma in real estate. Recently, our escrow office experienced probably one of the more difficult ethical issues: coming across highly probable transaction fraud a business day prior to closing. We wrestled with the issue all weekend a short while ago. Any way you sliced it, the ramifications were not good. In our minds, the “what-if scenario flow charts” were in full swing. For example:

  • Don’t close the transaction and lives will be turned upside down, not to mention thousands of dollars of commissions lost, including our own earned income. Side note: escrow (the “presumably” neutral party) only gets paid if the deal closes, an issue that I personally would like to see changed and take up with Dept. of Financial Institutions or others in Olympia.
  • Obviously, another downside is that we will probably lose the business relationship forever, regardless of whether we are correct or not. Certainly, how this plays out will clearly show the true colors of the agents involved.
  • Close the transaction and the risk grows exponentially as time goes on. Escrow will be named in a claim regardless of all the disclosures and tight legal language escrow has.

Interestingly, with the broker and sales agents fully aware of why we elected to not close, they have elected to try another company to close the transaction. Hopefully, they can work through the problem and get it done in a legal and ethical manner. We wish them the best.

In the end, pushing the ethical limit or being a party to fraud is just not worth the risk, short-term and long-term.