Tag Archives: real-estate

Brokers and Agents – a perplexing business model

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For those who aren’t agents let me explain how many of the larger brokerages (eg., in this area – Windermere, John L. Scott, Coldwell Banker Bain, etc) operate. As an agent you are an independent sub-contractor usually paying a monthly desk fee to associate with a particular company, plus variations of splitting your commissions with the broker. For that you get office space, administrative support, access to training etc.

What you do NOT get is client leads from the company. (except for Relo clients if you last long enough). For that you do your own marketing and/or sink to using the sourcing companies like house values, home gain and others of those ilk whose business model Ardell summed up so well long ago.

So here’s the part that I just don’t get. As an agent, there is no way I can come up with the marketing dollars to compete against House Values online. But my brokerage (Coldwell Banker Bain) spends millions in advertising, development of their website and overall branding. Yet for all of that they have no pro-active lead capture system or method of distributing leads to field agents. Certainly any of the larger brokers could compete better for the internet business and yet they don’t. Plus, if there are agents willing to pay for lead sources why not capture that revenue back into their own company.

It seems to me that the logical thing to do would be develop a virtual brokerage office.

  • Create a staff of salaried agents for an inside sales team
  • Implement a product like LivePerson to monitor web traffice and engage potentinal clients online
  • Capture those leads and turn them to field agents in the local office for a percentage of the commission (you have to pay for that inside sales team somehow)
  • Quit making your agents rely on 3rd parties for additional lead source generation

I’m going to propose this idea to my company but thought I’d run this by everyone for some feedback.

Paying for the Privilege of Marginalization

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The real estate industry is a funny place…

There is an obvious tension between the industry players who win through cooperation and the individual agents who win by differentiation. It kind of reminds me of the Tragedy of the Commons in that the actions that individual agents are taking in their best interest are slowly breaking apart the well oiled machine that is today’s real estate industry.

In particular, I’m thinking of all the agent money that is currently being poured into advertisements for companies that are building tools designed to marginalize the role of real estate agents. Joel Burslem picked up on one example when he mentioned that Topix (jointly owned and run by the newspaper publishers: Gannett, Knight Ridder and Tribune) is getting into the FSBO market. If this is not a clear enough signal of the newspaper’s intent, the fact that the Tribune recently purchased forsalebyowner.com should make it clear that the newspapers are now the competition…

While it may be in best interest of individual real estate agents to put ads in local papers, these ads are funding companies who are clearly attempting to completely disrupt their industry. (Don’t even get me started on the irony that a bunch of real estate professionals in Seattle are giving content to the PI that will likely be plastered in FSBO ads before long!).

But it is not only newspapers where agents are paying for the privilege of creating their own demise. Every time an agent buys an ad on Google, they are helping to fund a tool that is clearly meant to marginalize them.

I’ve been holding my tongue on this issue for quite a while because I’m sure a good argument could be made that I’m too biased in that I’m viewing the topic through my employer’s tinted glasses. Nonetheless, I can’t help but wonder if agents are going to get hip to the fact that they really should be using and/or creating their own media before the commons are destroyed.

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“Man in the Bushes” Listing

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[photopress:man_in_the_bushes.jpg,thumb,alignright]This article is in response to a reader’s request yesterday, that I describe what a “man in the bushes” listing means.

Over the years, I have used the term “man in the bushes” most often in response to the question, “Can I sell my home myself as a For Sale by Owner”. If they are ready, willing and able to do that, I tell them to try it for up to 30 days, even two weeks, to see if they have a “man in the bushes”. I once sold a home with 23 men in the bushes.

A “Man in the Bushes” property is usually a unique home that has something that no other house has, and is also one people have suspected may at some time be sold. In this case a stand out corner property in Mount Baker built at or before the turn of the last century in the late 1800’s with some Lake view. It also has an owner who for some reason, actually many reasons, never got around to moving into it. So it has been vacant on and off for some forty years.

There’s usually someone, or several someones, who drive by it on a regular basis (in this case visiting his brother who lives nearby) who has said to himself a skazillion times, “If that house ever goes up for sale, I’d like to have it”. Of course they don’t know for sure until it does go on market and they go in it. But they are already 70% sure they want it. That’s a “man in the bushes”. Not just someone who is the first one to view it when it is listed, but someone who has been waiting for that opportunity to arise for a long time.

A seller can either try a FSBO on that, or get a deeply discounted rate if the “man in the bushes” comes forward very quickly. Another option is to list it in the mls and “exclude” the man in the bushes from the listing with a timeframe. “If Mr. X arrives and makes an offer on the property within 7 days, the listing is null and void”. To do it that way, you need to know who Mr. X is in advance and put him in the contract by name.

Sometimes the Man in the Bushes is a relative who has indicated an interest in buying it over the years, but may be “all talk” and “no ability to do so”. You give them 7 days to “put up or shut up”. This way the family doesn’t have to hear for the rest of their lives that this guy would have bought it, but no one gave him the opportunity to do so. There should never be a fee connected, other than maybe a handling fee, for people to sell their home to a relative. So if you think you have a “Man in the Bushes” in your family, give them 7 – 10 days to at least put that interest on paper, with no or little fee paid if a family member buys the property in the early part of the listing.

Lame MLS Data Again!

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[photopress:mea_culpa.jpg,thumb,alignright]Looks like I need to get down on bended knee and beg Robbie’s forgiveness, pounding my chest and saying “Mea Culpa!” Robbie, I try and try to give you accurate data, honestly I do. But it just is not always within my power to do so. I am totally stumped on this one.

If anyone out there can help me get the accurate data for Robbie, PLEASE point me in the right direction.

I listed a property in Mount Baker. Checked the tax record and it said “Year built 1900”, so I entered that “data”. This is a “man in the bushes” listing, so I already know who is likely going to buy it. But still, for Robbie’s sake, I would like the data to be accurate. Out of curiosity, I wondered if there were any houses older than this “Grand Olde Dame” of Mount Baker.[photopress:mt_baker.jpg,thumb,alignleft] I did a General Query in the tax database for homes built between 1800 and 1900, and guess what?! Anything OLDER than 1900, shows AS 1900 in the tax records!

So here I am realizing that I put “Year Built 1900” in the mls, and maybe it is really older than that. Of course my first thought is about Robbie and his “Cries Against Lame Data”. Tell me please, what’s a girl to do when the tax records won’t take me back further? So I contact the Title Company and they say they can only do what I did, giving them 1900 also. They then go a step further, and now do know that “the original plat declaration” for that section of Seattle was in 1888. So maybe that tells us that the house was built in that 12 year window, between 1888 and 1900.

Could “the original plat declaration of 1888” be filed AFTER the house was built there? Enquiring minds want to know! Sorry Robbie, I aim to please; and yet again disappoint. MLS has no way to put a “date range” for year built, or “older than” 1900. So 1900 it stays. Though I did try to account for that in the remarks section.

Am I forgiven, or do I end up on “Robbie’s Lame List” with a “lazy agent” dunce cap on my head? Oh well, “Wednesday’s Child is full of Woe”, as the Nursery Rhyme goes. Some days I wish I were born on a Sunday.

Using Alexa to Compare Traffic Across Sites

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Do you ever wonder how well your website and/or blog is doing in comparison to your competitors?

While there is not a great site on the web for getting accurate traffic statistics on competitors, Amazon does provides some stats based on people who are using their Alexa Toolbar. Rather than try to give total site hits (which they can’t do), Amazon gives us relative stats (as in “X number of people out of a million” visited this site). Here are some observations from some searches I did tonight:

All good stuff, but remember to take these statistics with a grain of salt. As Matt Cutts of Google discussed a while back, the type of people visiting a site can definitely skew these results greatly and considering Rain City Guide is in Amazon’s backyard, we’re more likely than most to have traffic from people with the Alexa toolbar installed.

Website Owners Not Liable for Comments

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Considering this issue comes up every time Russ and I speak in front of an audience (including yesterday), I thought it would be interesting to share that the courts have been consistently ruling that blog owners are not legally responsible for the comments on their site, even if they moderate…

It happens all too often that some website owner in the US is sued with claims of libel over comments on that site in an open forum. We usually point to Section 230 of the Communications Decency Act, and note that it’s pretty clear that service providers of such forums are not liable for content they didn’t write themselves. We also like to point to a 9th Circuit ruling, noting that, even when such comments are moderated or approved, the site owner or moderator isn’t responsible. While the Supreme Court later refused to hear an appeal on the case, meaning the ruling really still only covers the 9th Circuit, the ruling is so reasonable, you’d have to hope other courts would agree with the logic. It appears some already are. Tech Law Advisor points us to a few different sources covering a District Court ruling (outside of the 9th Circuit) that comes to similar conclusions (even if the article is improperly headlined). The case involves the somewhat infamous TuckerMax forums, which are known for being a bit on the… free wheeling side of things. Apparently, a bunch of anonymous commenters there were upset about a party thrown by some publicist, and posted some relatively mean comments about him in the forums. The publicist then sued Tucker Max, claiming that he was liable for the comments, even though it was clear they weren’t made by him. The actual court ruling (warning: pdf) is an enjoyable read, as the judge clearly explains why he’s throwing out the case. He even cites the ridiculous number of censors China employs to filter the internet to explain why it’s not reasonable to expect internet site owners to police their forums more carefully — even as he notes that Tucker Max clearly admits to moderating comments on his site. The ruling also refers back to an older ruling pointing out the importance of protecting free speech, even when vulgar. It’s another reasonable ruling concerning these issues. Hopefully, once enough of these pile up, most lawyers will know better than to file such lawsuits.

New Construction Closing Dates

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Further to this string of three posts, I think we need to talk about new construction closing dates. I received a call about ten days ago from a former client whose brother was pulling his hair out regarding a new construction purchase. He was TOLD that the home would be ready in July or August, or at least that is what he heard. All of a sudden he got a call telling him that closing was in 2 days.

It was a very large, well known builder of moderate priced homes in this area whose contract stated they had about 60 days to build it and then the buyer had 2 days after that to close it. The buyer’s first language was not English and relied more on what he was told and did not read the contract specifics. I jumped in and resolved the problem for him. All worked out and I won’t give the details of how I did that, as that is not the point of this post.

The point is that buyers of new construction must know that builders ALMOST ALWAYS have a condition in the contract that the buyer must close within X days after the home is completed. Unless the builder takes a contingency on the sale of your home AND a contingency on the fact that the sale CLOSES, you are required to close within 10 days or less usually of the time the home is completed. Builders often do not put close dates unless it is a spec house already built. They do not want to carry that house after it is completed, they want to close. Read your contract carefully with regard to when you will be required to close and do not rely on “proposed completion dates” or verbal representations by the sales people.

Usually there is NO PENALTY to the builder if the home is built later than expected and there is a per diem charge to the buyer if the buyer does not close within the X days of the completion date. Also the builder does not have to extend the close date, so paying the per diem may not even be a viable option for the buyer. If you cannot buy unless you sell, you need to be sure you understand the complexity of meeting these builder contract requirements. Matching a sale to a new construction purchase is extremely challenging and ridden with potential pitfalls.

The “starter price” condo market

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Many years ago, I did a study of the “starter price” condo market and received some very surprising results. Based on Dustin’s post, I re-did the research and obtained the exact same results as I did back in Bucks County, PA some 13-16 years ago! Interesting…

The two highest months for people making decisions to buy a condo in what we might call a “starter” price range are March and July. March because first time buyers are often urged by their accountants, or simply by their tax return on their own, to own instead of rent. July due to downsizing of empty nesters or now single, divorced persons selling their single family homes in June and July and moving to a condo. Of course, every month has a mix of reasons to buy, but I find these two reasons account for the fact that these two months tend to be the highest in a yearly cycle.

Sales in June and August are not too far behind and on a quarterly basis, sales are more fairly consistent year round for condos than single family homes, with a slight drop in the last quarter. Again we are not talking about million dollar condos, we are talking about the lowest rung of the price chain.

Actual statistics of 2 bedroom condos under $300,000 (most about $250,000) within a short distance of Sundance in Klahanie.

2005 – Jan. – 10, Feb. – 14, March – Twenty eight – Sold in the 1st quarter – 52

April – 18, May – 19, June – 24 – Sold in the 2nd quarter – 61

July – Thirty, Aug. – 24, Sept. – 13 – Sold in the 3rd quarter – 67

Oct. – 13, Nov. – 9, Dec. – 15 – Sold in the 4th quarter – 37

Inventory in 2006 is way down with only 39 sold in the first quarter compared to 52 in 2005. This does not appear to be because there are fewer buyers, but because fewer people are putting their properties up for sale. However this low inventory in the resale market should not necessarily lead you to believe that demand will be high as supply is low. There is a lot of pressure on the resale markets from New construction and Condo Conversion Projects, generally. Even if the new construction or condo conversion is not in your back yard, people will drive an extra mile or two for brand new.

I have to admit that I almost fell off my chair to find the results almost identical in this scenario, to the study I did some 3,000 miles away back in the early to mid nineties.