Notorious R.O.B.

Kudos to Trulia for this:

Trulia Voices is one of the most popular parts of our site. Our rapidly growing community has done a great job asking and answering real estate questions. Today, we’re excited to announce the release of our RSS feed widget for your Trulia Voices Answers. You’ll now have the ability to broadcast your Voices Answers directly on your website or blog. It’s a great way to expand the conversation.

The rest of the post is an illustrated, step-by-step instructions for anyone with even a modicum of Web savvy to put one of these widgets on his or her site.

This is frankly brilliant on Trulia’s part.  It’s agent users get a valuable tool/feature, and that in turn encourages them to participate more on Trulia’s website, which drives traffic and ad revenues.  (An aside: Why wouldn’t some of the top Trulia Answers agents be entitled to a share of the ad revenues Trulia is generating on their content?)

Oh yeah, if you’re a Big Brand or a Big Brokerage Company or a MLS… worry.  That’s one more thing your agents won’t need you for.

-rsh

Redfin has one of the best corporate blogs not just in real estate, but in…well, business.  Posts like this are the reason why.  Glenn Kelman takes the Freakonomics guys to task (gently, as is his wont) for relying on bad sample set to conclude that brokers have little to no value.

Stephen Dubner and Steven Levitt renew their argument that real estate brokers aren’t worth 6%, citing a study (PDF) conducted by Stanford economist B. Douglas Bernheim and one of his graduate students, Jonathan Meer, which shows that using a broker has no effect on a home’s average selling price.

We are an (online) broker ourselves, but have argued that consumers should be able to choose the real estate services for which they pay, so I’m not sure we have a dog in this fight. In the past, we have welcomed studies showing that buyers and sellers can get along without a broker, and argued that a client working with an online broker negotiates a better price. But in this case I was surprised that the Freakonomics team didn’t evaluate the Stanford economists’ methodology.

The Stanford study only evaluated 800 homes sold on the Stanford campus, “the ownership of which is limited to Stanford faculty and a limited number of senior staff.” In such an environment, marketing is much easier because of the small number of potential buyers, trust is high because of the buyers’ affiliations with one another, and supply is extremely limited: many academics would kill, or even teach an extra freshman survey course, to live on the Stanford campus.

It’s worth reading the whole thing for Glenn’s take on it.  He is, after all, the CEO of a fairly unique brokerage proposition.

As usual, Glenn is much nicer than I am.   One has to be willfully blind to the flaws of the Stanford study to make any conclusions about the value of real estate brokers based on that sample set.  That’s like drawing conclusions about commercial real estate based on a study of Class-A buildings in midtown Manhattan — the city that breaks the laws of physics.  (Did you know that Manhattan office buildings routinely have more rentable square footage than physical square footage?)  Neither place has much resemblance to other places, like say… planet Earth.

One of the biggest flaws of the Stanford study is the severe restriction not just on supply, but on demand.  These 800 houses are limited to Stanford faculty and limited staff (presumably, university brahmins).  Maybe I’m a wealthy VC in the area and would like to own a house right on Stanford campus — sorry, no can do.  And we’re going to make conclusions about pricing based on that?  It’s a neat trick to make statements about the free market once you’ve eliminated the free market from the analysis, no?

Glenn thinks college towns may be a signpost to the future:

In real estate and in life, college is a smaller, more perfect vision of how the rest of the world could be. We thought it was interesting that the previous academic study on brokers’ effectiveness focused on Madison, Wisconsin, because this is also a small college community where alternative approaches to real estate have reached critical mass. Maybe these communities point the way to a post-brokerage world waiting for all us, where both sides abandon their brokers, where we can access information for ourselves online, where we can come to terms more easily and economically.

I seriously, seriously doubt it.  For one thing, college housing may be immune to cyclical downturns.  For another, I’d imagine only military bases have higher turnover in population than college towns, even amongst the faculty.

This is not to say that real estate brokerage will survive in its current form.  There are enough broken things about how real estate works today that some change is inevitable.  It remains to be seen how things will evolve, and what the value of brokerage services will be in the future.

It may not be, as the Freakonomics team tells us, based on the idea that using a broker can get you higher prices on your home.  On the other hand, it may be that using a broker makes it easier to get you higher prices.  Huh?

I mean that presumably there’s a set of activities that one has to do in order to maximize price on a house.  Listing and marketing are a part of it, but so is something like staging a house.  The homeowner himself can stage the house, but maybe he’s a Professor of Economics and knows as much about proper staging as a real estate agent knows about the Black-Scholes theorem.  If there is some finite set of activities, then someone has to do them — otherwise, the price of the house will not be maximized.  A buyer will offer less simply because the homeowner forgot to clean his bathroom.

Real Estate agents may end up becoming something like a specialist in house staging, and extract value for that service.

Or it may be (as the Stanford authors admit) that using an agent results in faster sales, although not necessarily higher price.  There’s value in that.

Heck, there’s value in not having to be around to show my damn house to some damn couple.  It’s a convenience thing.

Now, none of those things may be worth 6%.  That’s a different kettle of fish.

For what it’s worth, I believe the future holds variable pricing for real estate brokerage services.  Rather than trying to enforce a one-price-fits-all model on consumers who don’t want all those services, brokers may end up offering a buffet-style set of choices.  Want me to show your house?  That’ll be 1%. Want flyers made up?  That’ll be 0.5%.  Want me to make a website for your house?  That’ll be $500.  That provides flexibility and choice to both consumers and professionals, allowing both to feel that they’re getting what was bargained for.

But even that model may not work on the Stanford campus with its restriction on supply and demand.

-rsh

I just ran across this fantastic website (h/t Instapundit).  Carlust is such a great name for it as well.

I really like Chris Hafner’s writing style as well — compact, personable, totally on-point.  Great blog writing, IMHO.

It works beautifully for cars.  I know it can’t possibly work as beautifully for houses, since cars are products: thousands of people can share their lust over a particular make/model.  At the same time, I know there is such a thing as Houselust as well.  Some of my former colleagues at Realogy were deeply in the throes of houselust — which might explain why they work at a place like Realogy.

Curbed does a fair job of houselust, actually, but it would be a really interesting RE.net experiment for someone to setup a Houselust.com blog and invite a bunch of people to post photos and commentary on a particularly beautiful house.  Like, say Falling Water:

For that matter, can you imagine doing a listing like a post on Carlust?  What would that look like….

-rsh

Now, this is good news from NAR:

The integrity of data is a foundation to the orderly Real Estate market. The Real Estate Transaction Standards (RETS) provides a vendor neutral, secure approach to exchanging listing information between the broker and the MLS. In order to ensure that the goal of maintaining an orderly marketplace is maintained, and to further establish REALTOR® information as the trusted data source, MLS organizations owned and operated by associations of REALTOR® will comply with the RETS standards by June 2009, and keep current with the standard’s new versions by implementing new releases of RETS within one year from ratification.

So, by June of 2009, all MLS operated by Realtor associations will be RETS compliant.

Currently, only 63% of MLSes are RETS compliant.

If you’re a betting man, here’s an interesting wager.

Which standard will see 90% adoption by brokerage companies first?

(a) RETS

(b) Yahoo!/Trulia/Zillow standard

Now, do keep in mind that being “RETS-compliant” is still being worked out:

What it literally means, well that is still being defined. The RESO Certification Workgroup has been busy identifying what being a Compliant MLS means. Such as, the tests that the vendors need to pass to be a compliant product, and the tests/criteria that must be met to be a certified-compliant site (MLS). There will probably be much discussion regarding all this during the April 2008 RETS meeting in Philadelphia.

Not sure if Yahoo! et. al. have published what being “Yahoo! compliant” might mean.  Presumably, if you use their standard to publish and share listings data, that makes you Yahoo! compliant.  But who knows?

So… place yer bets!

And all you folks in commercial real estate… please accept my condolences for the state of data exchange in your industry.

-rsh

From the invaluable Calculated Risks blog, Vallejo Close to Bankruptcy Filing:

Vallejo, a city of 135,000 outside of San Francisco, moved closer to bankruptcy after negotiations with its labor unions collapsed.

Bondholders will likely be asked to sacrifice some of their investment if the city seeks bankruptcy protection, an attorney for the municipality said last night. Vallejo faces ballooning labor costs and declining housing-related sales-tax revenue, leaving budget officials projecting that money will run out within weeks.

For people who have been hoping that the bottom may have been reached with real estate prices, I wonder what widespread municipal bankruptcy might mean.

Assuming that Vallejo’s municipal unions take the “devil take the hindmost” attitude that most unions do, the city will go bankrupt.  In bankruptcy, I assume the city’s finances will be administered by a magistrate or a bankruptcy judge.  (Although I have very limited experience with Chapter 9 bankruptcy, I did study bankruptcy law generally, so I’m assuming here.)

So.  Once bankrupt, will Vallejo (a) raise property taxes, or (b) lower property taxes?

If you guessed (b), bzzzt, go to the back of the line.

Maybe the court can set aside the union contract (as can be done in bankruptcy) and force the unions to negotiate all over with the now-bankrupt city, with court supervision.  But I don’t get the feeling that Vallejo is going to have a lot of services for the next few years, do you?  What would home prices in Vallejo look like a year from now, I wonder?

CR thinks that Vallejo is just the first in a long line of California municipalities that will be bellying up to the bankruptcy bar.

I think this is a development to watch.  Furthermore, it might not be a bad idea to take another look at your own town/city’s financials.  How’s their income — much of it tied to real estate via property taxes — compared to their pension liabilities and other generosities that cities flush with cash over the past few years have been showering on their public unions?

-rsh

UPDATE:  I have been asked to take this post down by my colleagues at OnBoard, as they feel there is a conflict of interest inherent in a senior member of the executive team writing critically about a current client.  While I have my thoughts on that, in this case, I will defer to their judgment.  The original post has been removed, for now.  I apologize to anyone who has linked over to it.

And yes, I know this is my personal blog.  I am choosing to do this at this time, out of respect for my friends and colleagues at OnBoard whose opinions I respect enormously.  Not out of agreement, necessarily, but out of understanding their point of view.

I further stress that I have not, nor has anyone at OnBoard to the best of my knowledge, heard anything about this from Coldwell Banker.  This is merely something that needs to be resolved between myself and my colleagues.  I may repost it at a later date, if that is the decision I come to after discussion with them, and others.

Thanks,

-rsh

So I’m trying to put my thoughts on cluetrain real estate together.  And while all those thoughts are swimming around my head, I read this fantastic interview of Alex Chang, CEO of Roost.com, over at 4Realz.

Specifically, I read this section:

I don’t think it is a stretch to say that the big brokerages are only just beginning to use their websites to create a compelling consumer experience that competes with REALTOR.com. Why do you think it has taken the national brokerages so long to complete on this front?

It’s a question of core competency. It took a long time for retailers to get good at building e-commerce sites which is one reason why Amazon has done so well. Clearly, forward thinking brokers get this and are investing in their own websites. But the bottom line is that building great customer experience online is hard, even if that’s all you focus on all day long. And it’s not cheap. Also, I think it takes a little while to start to be able to measure and see a return from a broker’s site in this industry. So you have to have the appetite to make longer term investments in technology. That can be a tough pill to swallow.

Then I read this:

To date, many of the most successful real estate professionals do most of their marketing off-line. If one of these experienced real estate agents wanted to jump-start their online marketing, where would you recommend they begin?

It starts with your own Web presence. First, create a couple great websites and blogs that get across why you are the best at what you do in some specific ways. Ensure that there are all sorts of ways for consumers to contact you on these sites, and obviously make sure you have some excellent ways for consumers to search for homes on these sites (you knew we were going to say that). Second, get some tools that will help you actually see what return you’re getting from traffic to these sites. Where is the traffic coming from? What leads is it generating? When those are done, find targeted marketing vehicles that send traffic you can actually measure to these sites at budget levels you can afford.

Did you get that?

So on the one hand, the large brokerages like RE/Max and Coldwell Banker lack the core competency to build great customer experiences online.  On the other hand, Alex is recommending that agents create “a couple of great websites”.  Not just one, mind you, but a couple.

Alex’s parenthetical comment above, the “you knew we were going to say that” is actually illuminating.  Here’s my translation of what he is actually saying:

You need a couple of great websites if you’re going to be successful marketing yourself online.  Thing is, building good websites is very hard work, even if that’s all you do every hour of every day.  It’s also very expensive.  In fact, great big companies like Realogy and Re/Max can’t do this right.  Ergo, there’s no way that you, Ms. Agent, are going to be able to.  Thankfully, Roost.com provides you with an excellent search solution and a great IDX-compliant website to you.  You only pay for the traffic you want.

I dig it.  It’s smart marketing on Alex’s part.

There’s a saying in the retail industry, of which my wife is part, that you don’t out-WalMart WalMart.  How do you compete with the behemoth that is WalMart?

If you try to compete on the same basis — price — then WalMart will kill you.  Their operational efficiency is many times greater than yours.  Having invested billions of dollars into their IT system, WalMart knows when a lightbulb in Aisle 4 of their store in Topeka is about to go out.  They know that Store #1422 will run out of Purina CatChow day after tomorrow, so they send the truck out with Purina CatChow with just the right number of units today, to ensure that Store #1422 never runs out, and the customer is never turned away with cash in her pockets.

You’ve got to compete on some different basis.  Target is doing it through designer labels, appealing to higher end customers.  Costco is doing it with more branded merchandise.  Neither competes with WalMart on price alone.  You can’t out-WalMart WalMart.

So here’s a thought for all you real estate agents out there.

Go over to Roost.com, to Trulia, to Zillow, to whatever site you can think of.  Check out what they have.

Can you out-Roost Roost?  Out-Trulia Trulia?  Out-Zillow Zillow?

Those websites have great user interfaces, wonderful data, and trained professionals who spend all day thinking about user experience, information architecture, and human-centered design.  You have none of that.

At the same time… I have a secret to tell you.  Guess what Roost, Trulia, and Zillow don’t have?  That none of the great and powerful websites out there have?

A face.

Not one of these websites has a face.  Or eyes.  Or a smile.

You can’t out-Roost Roost.  But Roost can’t out-you You. 

Cluetrain claims that markets are conversations.  But it doesn’t say, nor do I think it needs to say, that markets are online conversations.  The Internet makes types of conversations possible that were not before.  But there are conversations that predate the Web, and will survive it.  Authentic, human, face-to-face engagement.

There is no substitute for it in business.

And you’ve got a face.  Roost, et. al., does not.

Think about that.

-rsh

Thanks to InmanBlog, I learn that there is an ethical dilemma brewing in RE.net.  It appears that NAR has promulgated a new standard

This standard falls under Article 12 in the Realtor code, which provides that Realtors “shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing and other representations.” (See Inman News article.)

A case example for this new standard, provided by the National Association of Realtors in its 2008 Code of Ethics and Arbitration Manual, found that a Realtor who operated a real estate site named “northwoodsandlakesmls.com” was in violation of the code and standards because “a real estate-related URL that included the letters MLS would lead reasonable consumers to conclude that the Web site would be an MLS’s, and not a broker’s Web site.”

The matter is up for local hearing panels to consider, in the event ethics complaints are filed against Realtors who operate sites with the word “MLS” in them or who are otherwise accused of using a misleading Web address.

This is tantamount to the Ford Motor Company prohibiting its dealers using a name like “Joe’s Horse and Carriage”.

With very few exceptions, MLS websites routinely suck.  Not just as “Web 2.0″ sites, but as websites, period.  Here’s NJ MLS for example.  Awful site — great people they may be over there at NJ MLS, but I think they know that their consumer site is plain old bad.  Even large, powerful MLS organizations like MRIS have public websites like this.  It’s not teh good.  I mean, how many clicks before I actually get to see a listing?

In this day and age, is NAR truly concerned that some broker is going to gain an marketing advantage by including the words “MLS” in its name or URL?  As a marketer, I do believe I would have to advise my clients not to use those letters if at all possible.  In fact, if I could figure out a way to have my client’s competitors use “MLS” in their name or URL, while my client’s site remains blissfully free of the taint, that would be wonderful.

NAR needs to get with the program.  Recognize what’s important in todays so-called “Web 2.0″ world, and focus on those.  Might I recommend that NAR begin with (a) understanding the Realtor brand, where it is, and how to improve it; (b) understanding the consumer’s mindset in a far stronger, clearer way, to provide guidance to its members; and (c) working on removing barriers to open and honest conversation between agents and consumers — for example, some of the overreaching provisions of the Fair Housing Act.

-rsh

Over on Homegain’s blog, his new home, Joe Ferrara has a set of excellent advice for real estate agents:

As in any profession, you get pigeon-holed, often unflatteringly and marketing yourself becomes an uphill battle to overcome a stereotype.

There’s a better way. Elevate yourself to “expert” in your field. It does not matter how small your specialty because as an expert you will automatically stand out from the crowd of other like professionals.

People feel more comfortable dealing with someone who they know is a specialist. They will seek out experts. Just make yourself known as one.

Then he goes on to discuss five ways you can be an expert.  Contributing to newspapers, holding a seminar, etc.  It’s really good stuff.  Go check it out.

I have one thing to add to his list:

6.  Actually, you know, BE an Expert.

Joe addresses this right at the beginning, but then kinda glosses over it.

You are a professional. You possess specialized knowledge. You may have devoted yourself to extensive education. You may have several decades of experience. But when you introduce yourself or hand out a business card you’re just one of the crowd of that profession.

The implication is that anyone can become an expert by following Joe’s Five Step Program to Guruness.  That ain’t the case.  The precondition of using Joe’s Five Step Program is the highlighted part above.  If you are not a professional, if you possess no specialized knowledge, if your idea of extensive education is attending NAR conference once a year, then no matter how many years of experience you’ve got, do not hold forth as an expert.  If you think you know everything, do not hold forth as an expert — seems to me that more I learn, more I know about something, more I realize that I really don’t know jack.  This is not to say that I don’t know more than this guy, or that guy, or even the vast majority of humans on the planet.  Just that I realize there’s so much more I need to know.

I’m sure Joe would agree with me, but I wanted to make sure that message resonated.

-rsh

Garr Reynolds, at Presentation Zen, is a must-read blogger/writer/authority on presentations for anyone involved with marketing, communications, or any sort of presentations.  He also has some views that he shares from time to time that are highly relevant to any thinking about marketing.

His latest is a masterpiece as well, and it deals with the issue of Inspiration in presenting:

If your presentations, speeches, and your words in general are inspiring to others—or if you yourself are deeply inspired by the words of another—it’s just a matter of time before someone emerges to dismiss the importance of such inspiration. It’s just a matter of time before someone will try to bring you down. They will demean your enthusiasm, optimism, and hopefulness as symptoms of shallowness. Inspiration is OK, but “too much” inspiration is inconsistent, they will say, with the idea of serious content and a serious message. This, of course, is complete horseshitake.

I urge you to read the whole thing.  It’s worth your time.

Now, onto the arguments.

I gather that Garr himself was inspired to compose this paean to inspiration by one Barack Obama, orator extraordinaire, currently the frontrunner for the Democratic nomination for President.  Mr. Obama has been under attack recently for the seeming emptiness of his soaring rhetoric, and Garr leaps to defense of not Mr. Obama, but of soaring rhetoric:

Attacks on his record and experience are fair game, but it’s ironic that Obama’s amazing oratory skills are belittled by some as unimportant—and worse that they are just a symptom of a man without ideas or a plan. You know, a man who is all hat and no saddle as they say. Logically this does not follow. A man can be articulate, engaging, inspiring and have important content. But my point is not to discuss politics here, of course, but simply to address this issue of emotion, inspiration, and communication in a way that relates to our own lives as business people, academics, researchers, and leaders of all kinds.

Since I too do not wish to discuss politics, of course, I won’t get into an analysis of Obama.  Rather, an analysis of Obamania is warranted.

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