If you thought “Zestimates” were off, try RealEstateABC.com’s Value Tools

Posted on March 30, 2006 by Robert Gray Smith

Announced with lots of fanfare on Inman today about New home-valuation site rivals Zillow. Just went to check it out and it valued my home at $618,000 compared to Zillow’s Zestimate of $1.12 Million. Hmm..just a slight margin of difference there. Inman’s blog site covers the ABC Value tool as “Zillow is old news“.

Personaly, while neither is quite accurate (I think Zesitmates have been covered enough already), I’ll take the old news over the new player on the block. They seem to miss some major value factors like..oh about 50ft of waterfront. All-in-all I think these services make interesting discussion points for our clients but it will be some time before they are on the money.

Robert

Been Some Time — New Identity Theft Tactics

Posted on March 28, 2006 by DRMiller

I received an e-mail from our credit resource company explaining a new tactic that people are using to steal your identity.

The scam has to do with Jury Duty. The article talks about people that are receiving calls from people that claim to be court officials or a jury coordinator and ask them why they did not show up for their jury duty. The caller than explains that an arrest warrant has been issued because you didn’t show up.

The article also says that if you protest that you never received a summons for jury duty, the scammer asks you for your Social Security number and date of birth so he or she can verify the information and cancel the arrest warrant. Sometimes they even ask for credit card numbers. Give out any of this information and bingo! Your identity just got stolen.

They have reported this activity in 11 states so far and say that this scam is particularly insidious because the callers uses intimidation and bullies people into giving them their information.

Can Real Estate ever ‘Bust’?

Posted on March 27, 2006 by Eileen

Last week an investor called me from LA who is a stock broker. Our conversation got me thinking about the rich investment opportunity real estate provides, in spite of all the talk of a bubble burst. I’ve played the stock market for years and have won some and lost some but I’ve never been able to get it down to a predictable outcome. I invest in stocks because I’m told by financial advisors that I need to diversify. However, there is a way to invest that has many more controllable and dependable outcomes – Real Estate! Real Estate will never go out of business, never merge, never have problems with DOJ, never be outdone by the overseas manufacturing industry, never worry about ever changing technologies. There’s always supply and there’s always demand. With the exception of mother nature simply obliterating the landscape, real estate will always be there.

I don’t mean to paint an overly rosy picture here, but having been in the business for, gulp, nearly 30 years, and watching the ups and downs and downs and ups, (I once sold a home to a client with financing at 22%! not to mention using precious gems as a down payment!), I just don’t see the glass as half empty but rather half full. I have been a restaurant and marina owner and a real estate developer and investor, throughout the various market ups and downs. I suggest you look at real estate values over those last 30 years and see how many times they’ve multiplied. And we’ve had 5 or 6 ‘busts’ in that time. As a new licensee, I sold my first home for $32,500 in 1978 and today that home is listed at $495,000 – a multiple of 15 times. We all know this is true, so why are we all sitting around worrying? All this talk about real estate busting like the stock market did is just ridiculous. We’re not comparing apples with apples and even if the prices do go down, it will most likely be short term creating a great buying opportunity, and when prices bounce back we’ll all sit back and have a good laugh at all those naysayers with dour predictions.

I wish I’d taken my own advice in 1986 when I could have purchased 150 homes from a bank for 20 cents on the dollar. I didn’t have the foresight at that time to know what I am telling you now; real estate bounces back and prices rise even higher. Had I bought those homes that year, I’d be writing this from my estate in Maui! I’ve learned my lesson and now I want to share my perspective with you.

So, keep on investing. You may not be able to live off the profits from a short term flip but if you invest with someone that understands the market and the profit potential, you won’t have to worry about any ‘busts’ now or in the future.

Can we create THE Real Estate Guide for Seattle?

Posted on March 26, 2006 by Dustin Luther

I’ve been playing around with wikis for quite a while, and I finally got around to installing one (that I’m happy with) on the Rain City Guide server. But before I tell you what you can do with the wiki, I should probably give some background…

What is a wiki?

In the simplest sense, a wiki is an editable webpage. Have you ever read something and thought “I know more than the person writing this!” Well, a wiki gives you this option as it is designed to allow readers to edit webpages.

[photopress:hanging_tree.jpg,thumb,alignright]The most popular wiki is, without a doubt, the Wikipedia. The Wikipedia is essentially an encyclopedia made for the web. It allows anyone to update any page. This might sound like a mess waiting to happen, but in practice, the concept has worked well because there are more good people than bad on the site and the results is an amazingly comprehensive listing of public knowledge. While running a wiki takes a certain amount of faith in the “goodness” of contributors, all public wikis tend to have really good “roll-back” features that allow an users to “undo” unhelpful comments and block IP addresses from spammers (including the wiki I installed!).

So what am I up to?
In my quest to create the best resource for real estate information in Seattle, I’ve created a wiki that will complement this blog. Whereas the blog best serves timely updates, the wiki will hopefully become a wonderful way to present information that can benefit from continuously improvements over time.

So what am a really up to?
I want to create THE real estate guide for Seattle. It will take time, but I think that if we keep plugging away, we can harness the knowledge of the Rain City Guide community to create a truly unique resource. As I really do plan for this to become “the” real estate guide for Seattle, I’ve named the site: the.raincityguide.com.

What are some uses for the wiki?
In my mind, the low hanging fruit is a real estate directory for Seattle. If you are a real estate professional in Seattle, feel free to add yourself to the real estate directory that I’ve created. Adding yourself to the directory is easy and just meant to get you comfortable with editing a wiki, while also qualifying yourself as a web-savvy real estate professional. 😉

In terms of the directory, I’ve added the following categories: Appraisers, Construction, Escrow, Handymen, Mortgage Brokers, Real Estate Photographers, Real Estate Agents, Real Estate Lawyers, Real Estate Technology, and Title Companies. But the beauty of a wiki is that if I missed your line of work (assuming it is within real estate), simply edit the page and add your profession. (By the way, I haven’t added separate webpages for any of the people in the directory yet, but if you’d like to add a page to expand on yourself and the services you provide, feel free to create a page by putting your name in brackets, as in [John Doe].

Another idea I have is almost definitely ahead-of-its-time, but could be interesting, is that anyone selling a home is free to create a webpage that describes their home on the.raincityguide.com. It will cost you nothing but time, and if you are creative enough, it might get you some interesting publicity.

Of course, I have even more ideas for how a wiki could be useful for better understanding real estate in Seattle, so don’t be too surprised if I reference wiki articles in future blog posts! With that said, I’m a huge fan of the “release early and often” philosophy (and this feature is definitely released early), so don’t expect too much from the wiki and you likely won’t be disappointed!

Also, if a wiki seems a little bit intimidating to you, feel free to play around in the sandbox. You can’t mess anything up in there, so edit away and I think you’ll quickly see how easy it is to create and edit webpages with a wiki.

The ROOF – Things you should know

Posted on March 26, 2006 by ARDELL

Whether you are buying or selling real estate, or just trying to decide about your own roof replacement, there are a few things you should know about a roof. As I look out of my window, 95% of the neighbors have a composite shingle roof. So let’s talk about those.

When you are buying or selling a house with a composite shingle, do the math. The house next door to me has a 20 year shingle. The house next door to that one has a 30 year shingle. It is easy to tell a 20 year shingle, because the shingles lay flat, with almost no “definition”. As the shingles get thicker on a 25 year, 30 year, 35 year and up shingle, there is definition and a “layered” look. Even some of the best home inspectors can’t tell a 30 year from a 35 year shingle, so if you are a seller, and know you have a 35 year shingle, it would be good to tell your agent to highlight that feature, and you should also put it on your Seller Disclosure Form.

Sellers: Don’t forget to put GOOD things on the Seller Disclosure form, so it is not merely a highlighting of “bad” things. Add a list of good things, as an attachment if needed, and have the buyers initial the attachment too.

It took me about a week in the real estate business to learn the simple lessons of “roof math”. When I was selling my own home in Cherry Hill NJ, the home inspector went up the ladder to the roof. He came down and told the buyer that the roof was about 18 year’s old and may need to be replaced in 2 years, because it was a 20 year shingle. I said, “The house was built 8 year’s ago. Are you saying they found some 10 year old shingles to put on the roof of a new house?” I really wasn’t trying to be “flip” or nasty, it just popped out of my mouth like that in true “Philly” style.

Everyone should know how to do the simple math of a roof without relying on the inspector. Not because the inspector will be wrong, but because a roof can be just fine and still be “due” for replacement soon. I’m not going to go into second shingles and third shingles, because something tells me these will be obsolete in the future, given most roofs are no longer flat enough to go that way. I will mention roof color briefly. Mr. Cherry Hill Home Inspector was somewhat correct, in that it was a black shingle. Often black shingles will not make it to 20 years, while gray or tan ones can go to 23 or 25. Heat absorption issues. You see very few black roofs in year round sunny climates, like Florida and CA.

Buying a condo? Think you don’t need to look at the roof? Not so. A few weeks ago I attended a home inspection of a condo built in 1986. I walked across the street and climbed up on something to see the roof. The inspector and buyer said “What the heck are you doing over there?” I said I’m checking out the roof. The inspector said “Why? That is the condo association’s problem.” By then both the buyer and inspector joined me under my “perch”. I said look, it’s flat, it’s a 20 year shingle, right?” Inspector said yes. I said “This place was built in 1986. 1986 plus 20 equals 2006. When I get the resale certificate, I need to check to see if they have enough money in reserves to replace the roof, or warn the buyer about a possible special assessment. I need to check the Reserve Study for cost of replacement. I need to check the dollar amount currently in reserve for all replacement items. If there is not enough money there for all things, I need to divide the shortfall by the number of units, or prorate per total square footage of complex by unit size, and give a range of possible special assessment amount.

Buyers note: The condo association is YOU. There is no Fairy Godmother, named HOA, with a magic wand.

I’ll end with this “red flag” for both buyers and sellers. I ask the owner or listing agent, “How old is the roof, especially when I can’t do the math well on a 1917 built home…too many roof changes to do simple math. Owner responds: “I just had the roof checked and it’s fine.” Big red flag! That is not the correct answer to “How old is the roof” 🙂

New-home sales take a tumble

Posted on March 25, 2006 by Dustin Luther

The Seattle Times reports that new home sales are dropping nationally:

New-home sales fell by the biggest amount in almost nine years last month while home prices declined for a fourth straight month, raising concerns that the once high-flying housing market could be in for a rougher-than-expected landing.

The Commerce Department reported Friday that sales of new single-family homes dropped by 10.5 percent last month to a seasonally adjusted annual sales pace of 1.08 million homes.

It was the second straight monthly decline after a 5.3 percent fall in January, and marked the biggest one-month drop since April 1997.

A Funny Thing Happened On The Way To The Forum…

Posted on March 24, 2006 by Chuck

Actually it was a great evening at the MIT Enterprise Forum program last Wednesday (3/15) on the topic of Online Real Estate. I was on the volunteer program development team that put the evening together, and I got tagged to put together this note for you 🙂 And my own personal thanks to all who helped us with insights and contacts to build the program, including Dustin. There’s already been a lot of great timely comments on the program in this blog, so this note is primarily to report some of the stats and survey results, and a couple of my own comments on disruptive technologies and market inertia (or active resistance, as the case may be).

Attendance at the dinner/program meeting was a sold-out 400 people, one of the highest numbers ever for an MITEF program. The program panel was made up of three local online real estate companies – House Values (Niki Parekh), Redfin (David Eraker) and Zillow (Spencer Rascoff), plus a broker, Real Property Associates (Gordon Stephenson), and an Internet savvy agent, who was also our moderator (Jim Reppond, Coldwell Banker). So it was a good crowd, and a good spectrum of players on the panel. The program consisted of introductions of the players and their companies, key questions and panel responses led by the moderator, and open Q&A from the audience.

Wednesday morning (3/22) we reviewed the results of the online survey we sent out to the 298 attendees that we had emails for – we got 96 responses back, which is a pretty good sample. Here’s some highlights of the responses:

63 % were there because the program was relevant to their work or job – usually not that high; lots of Realtors present, as expected. For over 60%, this was their first time at an MIT Forum event. The other large segment was more the regular MIT Forum attendees who follow, and lead, tech-driven companies and their business issues.
87 % said the topic was relevant to them; 78 % said the program met or exceeded their expectations.
69 % said the level of detail was just right, but 31% said it was too general – higher than we would have liked.

Enough of the stats. Here’s some quotes from the comments that show more of the flavor of the event, and some of the mixed reactions it generated:

“Having Zillow, Redfin and House Values in the same room at the same time was the reason I decided to attend. Not necessarily the speakers themselves, but the companies they represented.”

“I was expecting to hear about more revolutionary technology. It seems the real estate industry is still in the technology dark ages.”

“The topic was “The New World of Buying and Selling Real Estate”. The moderator and the audience of R.E. agents didn’t allow for a real discussion on the future because they feel so threatened by these new technologies. Boos from the crowd of R.E. agents and a moderator who encouraged it stifled an open and honest discussion.”

“It is difficult for businesses to share the future directly as competition is present and they cannot release product plans before they are ready to launch.”

“It was good to hear the stories on the companies’ background and how they work. Although, at times it almost seemed as though I was at an infomercial.”

“Great topic; always fun to hear the spirited discussion that an industry in transition generates.”

All of the above once again proving that it is very difficult to satisfy all of the people all of the time, and that divisive subjects generate divisive reactions. It would be fun to do this again a few years from now, when more of these companies are bigger, and public, and have more visible business strategies.

So now I get to put in my nickel comments, based on my own background as a tech exec, seven years working with the MIT Forum on these kinds of programs, and now full-time realtor for several years. I think that this is an industry in the very early stages of being hit by disruptive technologies and the new business models that they enable. The mass and momentum of the industry are huge, and the consumer market is highly diverse. It may take quite a while for the new business models to clarify and engage their target segments of the market and start to get real (no pun intended) traction. The players we see today may not be the players of the future (for example, see Dustin’s earlier post about Google Base vs Zillow). But some will get traction, and as they do we will see a lot of resistance and delaying actions by those whose market is being disrupted. Some resistance will be tightened corporate policies, some will be PR campaigns, and some will be lobbyist-driven regulation. Anything sound new here? We’ve seen it in industries as diverse as airlines and telecoms and travel and books and so on … Delaying change is worth $billions to the incumbents, and they are pros at the game. But it still looks to me like the technology train is on the tracks, and gathering speed. Personally, I will take every advantage I can of the technology-driven changes… and I will continue to welcome ‘old-fashioned’ people-driven referrals 🙂

Zero Commission

Posted on March 23, 2006 by ARDELL

[photopress:howie.jpg,thumb,alignright]We’ve been talking down there in the comments about all of the things agents are “not allowed” to do. One benefit of being an independent is that you can be an avant-gardist and try out new and different things from time to time. I had this idea. Everyone knows that when you list a house, you often sell other houses as a result. Buyers call on the sign or from the internet or you meet them at an open house. These buyers may buy the house they called about, or they may buy a different house from you.

How about reducing the commission on the house you have listed, every time you get a buyer client as a result of that seller’s house being for sale?

Let’s say it is a condo priced at $225,000 with a seller’s side commission of $4,500. Someone calls to buy it, but they have a dog and that condo association doesn’t allow dogs. You sell them a different condo that does allow dogs and earn a commission of $5,000. You would never have met that buyer if they didn’t call on the condo listed at $225,000.

So how about taking 10% of the $5,000 you made as a result, and reducing the fee on the listing from $4,500 to $4,000. Get two buyers from calls on the listing, and the fee goes down to $3,500. Of course no one would want their property on the market long enough for the agent to get 10 buyers, lowering their fee to zero. But it would be possible. Maybe it should be 20% each and 5 buyers to get to zero.

What do you think? Too complex? Is figuring that out as hard as trying to figure out what is going on with Howie on Deal or NO Deal? Maybe I shouldn’t have watched that American Inventors show…agents aren’t supposed to be as “out of the box” as you techies 🙂

Raising the Bar

Posted on March 23, 2006 by Eileen

Since Real Estate Sales is a unique beast and over the years has gotten more and more complicated and litigious, I thought it would be interesting to follow up on Robert’s post about the education needed to become a real estate agent. There are so many fields of knowledge that are needed to practice adequately, and requirements to get a license don’t even skim the surface. I’ve never understood why the standards for entering this profession are so low given the magnitude of the effect an agent’s knowledge has on a customer.

Every real estate contract I’ve ever written has had potential to blow up into a legal battle. None have so far, but that’s probably because my errors mostly went unnoticed, were negotiated away or didn’t do any financial damage. Agents can get in trouble when first opening their mouths to talk to a client about buying or selling real estate and I know that the average agent doesn’t even know what he or she doesn’t know. Despite the many years as I’ve been in the business, I learn something scary on nearly every deal.

When I wrote my first contracts in 1978, I didn’t even know what title insurance was and yet I was HANDWRITING a title insurance contingency (I had language that I copied). Things have changed, the contracts are now boilerplate, but most agents still don’t understand that boilerplate well. Experienced agents understand a whole lot more than the newbies since most of us learned it by doing it wrong at one time or another.

For instance, my buyers were under contract on a vacant house last year and I brought in a heating contractor to get a bid for replacing the furnace. Oh oh, the CO level was at 92%, according to the technician and guess what, he had to decommission the furnace (a state law, apparently) in the middle of a very cold January. The seller was livid, my broker was stumped, the other broker was stumped, but we negotiated our way out of it. The seller (an attorney by the way) paid for the furnace and my buyers refunded him at closing since they wanted to install a new furnace anyway. I got lucky.

That’s just one of hundreds of stories. The scope of a real estate transactions is so broad, that experience in construction, architecture, inspections, repairs, real estate contract law, title and escrow issues, Fair Housing, underground storage tanks, septic systems, well water, lead paint, mold, radon, multi-cultures, finance, accounting, a working knowledge of condominium law and association lawsuits, and all the lawsuits relating to OSB siding, Cadet heaters, etc etc almost seems to mandatory..

Before you think I’m being dramatic here, these issues all come up during a normal realtors practice on one level or another. If an agent isn’t scared of saying or doing the wrong thing, then they’re not aware enough of what can go wrong. Since attorneys aren’t in the showing and listing business, it’s not practical to have one tag along with the agent all day to make sure that every written and spoken word is legally correct.

The only cure for at least raising the odds of being competent is to require a higher level of education. To sell real estate, I don’t think you need English grammer (would be nice) or calculus or History of the World, but you do need to know how to compute fractions, percentages, and know how to qualify a buyer for a home or at least understand how the lender does it. You need to understand the accounting basics of the normal transaction, some basic understanding of 1031 exchanges and for sure, understand all of the multiple forms, what they mean and how to fill them out legally. We’re supposed to say “I’m not an accountant (attorney, etc) and I can’t give you advice in that matter

Rain City Guide

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