Notorious R.O.B.

Louis Cammarosano is a really smart dude. I know you might think you know that. But, really. He’s a smart smart guy. In this interview he briefly mentions his history prior to HomeGain:

Upon graduation from the Fordham University School of Law, I worked at Cravath Swaine and Moore in New York and London. I spent most of the 1990’s as a corporate Mergers and Acquisition and securities attorney working in London, Paris and Warsaw.

Cravath, Swaine & Moore is one of a half dozen law firms in the world that routinely goes by a single name: “Cravath”. Everyone in the legal industry knows who you’re talking about. (The others, incidentally, are Wachtel, Skadden, Sully, Cleary, and Latham. Granted, there are firms that use two names and are as well-known, such as Paul, Weiss or Davis, Polk… but I digress!) In every survey I have ever read, as well as personal conversations, Cravath is generally considered the best law firm in the country (and therefore the world). Certain firms are stronger in some practice areas (e.g., Weil, Gotshal is generally conceded as having the top bankruptcy department), and Wachtel would give Cravath a run for its money in overall prestige, but all-around, Cravath is simply the best law firm in the world. It equates to McKinsey & Co in management consulting and to Goldman Sachs in investment banking.

Cravath lawyers are known for their incredible brilliance combined with an incredible fortitude. A friend of mine worked at Cravath for a couple of years, until after a particularly brutal two week period of work, he came home to find a strange woman in his bed. Naturally, he asked her who she was. Whereupon she replied, “I’m your *#@$()&% wife, and you’re quitting that (#@&)(%@ firm.” You simply do not spend ten years working at Cravath unless you’re very very smart, very very hardworking, and very very dedicated.

Louis is such a man.

Therefore, it is no surprise that the latest offering from HomeGain — AgentView — reflects those smarts. Others have written about what’s good about it already, and as I tend to agree generally, I want to focus on something else. (Oh fine, I’ll quibble and nitpick later on.)

As I see it, with AgentView, HomeGain throws down the gauntlet to the major brands in real estate brokerage.

This may not have been their intent, but it is the impact.

Consider what services a brand provides to a real estate agent:

• a logo (or “flag”)
• national advertising
• national website
• marketing tools & materials
• training
• leads

Except for the “flag”, AgentView and HomeGain now provides everything else. If HomeGain starts to pick up brokerage licenses, it can provide a “flag” as well. I see no reason why a HomeGain yard sign would be any less effective than any other yard sign.

In terms of national advertising, Brian Brady rightly points out that HomeGain is a Google Rank 7/10 site that is going to be funneling traffic to these AgentView pages. Should I point out that Coldwell Banker is only 6/10? That Remax is only 6/10?

In fact, AgentView is also something larger brokers ought to be concerned about. It seems we’re in the age of brokers treating their agents like independent businesses. If that’s how your business works, then great. But then you’re going to have to do some serious thinking about the price those independent businesses are willing to pay for your services.

Let me be your ambassador of KWAN

HomeGain is charging $29/month per zip code. Brian thinks the average cost for an agent will be $40-$50 a month. Let’s go with Brian and call it $600 per year for the agent.

What does the brokerage charge the agent? 30% of the commission on each transaction as a split? 40%? Some charge desk costs plus expenses. Some charge agents referral fees for each lead sent to them.

For that matter, what does a brand charge the agent? The broker isn’t going to eat the whole cost of the royalty fee — not for long anyhow. 6% of the GCI?

Yes, I know — you need a broker’s license and take on liability and all those fun things to become independent. Honestly, I have to ask… is that hard to do? If an agent’s only need is to have a broker’s license and buy liability insurance, since she will have no employees, and work out of her home, and use HomeGain for all her marketing needs… well, you do the math.

This is a great move by Louis and the HomeGain people. It is also a challenge to the entrenched powers in real estate.

Resist the temptation to dismiss HomeGain’s transformation. After all, Trulia and Zillow have agent profile pages with listings. Trulia has Trulia Voices and the new blogging platform. What’s the big deal?

The difference between the three companies lies in how they see themselves, and how they view their relationship with agents.

Trulia and Zillow see themselves fundamentally as real estate media plays. They have home search and content and AVM’s and such, but their business model is all about advertising. Their customers are advertisers — consumers are but eyeballs, and agents are but free content producers. Again, I know the good people at Trulia/Zillow (and they’re all good people, at least the ones I’ve met) don’t think of things that way — but I do, because I tend to focus on essentials.

In contrast, HomeGain sees their customers as the real estate agent. In that comment I linked to, Louis wrote:

Key metric here is not top of funnel visits but delivered visits to agents. If our click through rate goes up 50% we can make the same money on 1/2 the traffic. If that happens we can cut out non profitable sources of traffic and make the same money at a higher margin.

This, ladies and gents, is not how a media company thinks. It is how a brokerage thinks. It is how national franchises think.

Let me see what I can find...

Nitpicking

Okay, so I promised a bit of quibbling and nitpicking. Keep in mind that I think AgentView is really solid; it’s a great extension of the HomeGain platform. I expect it will be successful.

Nit #1 to Pick: Buy a zip code? How… charmingly antique! Louis — call me at my dayjob if you guys need neighborhood boundaries. I know realtors tend to know zip codes really well, but I would think that a company with the technical competence of HomeGain would let agents buy neighborhoods (like “Soho” and “Greenwich Village”) that cut across Zip Codes (or are a small part of one zip code), as well as MSA’s, parts of towns, etc. Relatedly… where’s the map?

Nit #2 to Pick: The agent profile box at the top of the AgentView page (click here) strikes me as rather ‘undesigned’. Considering the importance of that information to the whole value proposition, I think it might merit a slight redesign to emphasize the information. Maybe leverage Flex or other technologies to sex it up a bit. Or just throw a designer at it.

Nit #3 to Pick: I love that the Agent Profile mentions how many HomeGain clients the Agent had. It would be awesome (for consumers, and for good agents) to add an Ebay-style feedback section here. Nothing works better than testimonials from actual clients — and if you were horrible, you deserve the black marks.

So… About that Gauntlet

For what it’s worth, I’m glad to see HomeGain throw down the gauntlet. This is a challenge that the big brokers and major brands can’t afford to ignore for long. I hope, I believe, that it will spur another round of innovation from companies that aren’t thought to be particularly innovative. Will they pick up the gauntlet and finally start flexing?

It’s a fun time to be in real estate technology.

-rsh

Want to know what will be on the minds of real estate brokers and agents in a few years’ time?  It isn’t often that you get to peek into the future, but I have found a time-travelling peephole:

For Jeff Good, president of Good Hospitality Services, the question of who owns customer data — the brand companies or the property owners — has become a more important issue in recent years. “We need more transparency in the data and how the brands use it,” he said.

The obsession our industry has with listing data is seriously misplaced.  The real battleground will be “Who owns the customer data?”

Wait, watch, and see.

-rsh

I went to post a lengthy comment on FOREM regarding this excellent post, but something went wacky with Joel’s Captcha system (socket not found or something?) and I lost it all.   Argh.  So I’ll just respond to Joel here.  But do read his whole post, as it is excellent.

My comment, which I attempt to reconstruct, had to do with this:

Agents should be syndicating their listings across the Net, taking dozens of high quality photos of the home, creating single property sites, doing video tours, blogging about their listings’ key selling features. Any or all of these approaches can add value (either real or perceived) to the bottom line of the transaction.

While Joel is absolutely correct on suggesting all of these steps, I can’t bring myself to blame agents at least for their failure to syndicate listings.  They are the victims, not the perps, at least as far as this issue goes.

Consider that in the 21st century, the real estate industry still lacks a common data standard for sharing listings data.  Consider that we still have hundreds of local MLS systems, each of which has its own data scheme and its own business rules.  Consider that we have dozens, if not hundreds, of websites each of which has its own data scheme and its own business rules.

As I’ve mentioned before, some agents are putting their listing into as many as a dozen different systems.  Even at 5 minutes per entry, that’s a full hour of the day that the agent is not spending actually practicing real estate.  If you have 8 listings, that is a full day’s worth of work where the agent has done literally nothing but put listings into websites.

Joel talks about taking dozens of high quality photos — great idea.  But how many photos can be displayed on any particular website or MLS?  In one site, it’s unlimited; in another, it’s one photo; in yet another, it’s three photos.  Is there any common way of designating photos so exterior shots and interior shots can be distinguished?

Data standards NOW! Woo-hoo!

So who are the perps?  Who is to blame?  As the great sage Michael Jackson once said, “I’m looking at the man in the mirror / I’m asking him to change his ways.”

The perp is all of us in the real estate industry.  For whatever reason, we have failed to deliver on the promise of the computer era, the Internet age, and the networked world.  Without question, syndication of listings was in the best interests of home sellers and buyers everywhere.  Brokers, industry associations, MLS, technology providers — we all failed to implement a common data standard for easily and quickly sharing listings data.  In some cases, parts of the industry actually fought against sharing data.

Rather than trying to reduce the amount of work that an agent has to do to properly market her client’s property, we have put barrier upon barrier in her way.  The wildly disparate IDX rules are just one example of such a barrier.

I know progress is being made.  But that project has been a classic story of one step forward and two steps back.  And no matter what data standard we come up with, we still need to deal with obnoxiously complex IDX rules by a couple of hundred MLS organizations.  We still need to deal with common standards for photos (size, quality, number, labelling, etc. etc.).  There are business rules that need to be worked out — mixing FSBO with MLS listings, for example.  There are laws and regulations that need to be reexamined in light of the new technology and customer environment.

In any event, at least as far as syndication of listings goes, I am willing to give a pass to agents for now.  They are the victims of a system that has, and is continuing to, fail them.

-rsh

Whatever do you suppose this is?

Zillow is a living, growing database of all homes — not just homes for sale (we currently have data on more than 80 million homes). More than 1.3 million owners have claimed their homes on Zillow and many have updated their home facts.

Kudos to Zillow for opening up their API’s.  One can quibble with Zillow (for example, their neighborhood data, which appears to be… let’s say odd…) but the decision as a whole is brilliant.

Just add Offers of Compensation and what do you get?

-rsh

Once in a while, Seth Godin will write something that makes me remember that the dude is really pretty smart.  This is one of those things.

Faced with the excitement of making a CD and all the knobs and dials, they overproduced the record. They went from being two real guys playing authentic music, live and for free, and became a multi-tracked quartet in search of a professional sound. And they ended up in the dead zone. Not enough gloss to be slick, too much to be real.

This happens at restaurants all the time. Give me a handmade huarache and it’s fine if it’s on a paper plate. Or give me something from Thomas Keller. But I have no patience for the stuff in the dead zone, the items that are too slick to be real, but not slick enough to be a marvel. Who, exactly, wants an industrial tuna sandwich wrapped in plastic wrap?

You can send me a hand-written note (but don’t write it in crayon with words spelled wrong) and I’ll read it. And you can send me a beautifully typeset Fedex package. But if you send me mass-produced junk with a dot matrix printer, out it goes. The dead zone again.

This insight has one of those head-smacking D’oh!’s built into it that makes what is profound seem incredibly simplistic.  But it is profound.

In our advertising saturated world, going halfway pretty much guarantees your marketing is going to get ignored.

In particular, I think this bears quite a lot of thinking about in real estate.

Marketing a house for sale cannot possibly be an easy job.  No way, no how.  Especially in this market.  At the same time, I do think that far too many brokers fall straight into Godin’s Dead Zone when it comes to marketing materials for the homes they are representing.  They are too slick to be real, but not slick enough to be a marvel.

I did a Google search and picked this flyer entirely at random:

Holy Dead Zone, Batman!

The flyer is too slick to be “real”.  And yet, it’s not slick enough to be eye-catching or attention-grabbing.  There’s no wow there.  No pizzazz.  Nothing that makes you want to check it out further.  (Granted, it’s a hard thing to judge printed material by online photos… but still….)

Note that this particular listing is for a $10m house — that’s ten million dollars.  Assuming a modest 2.5% commission rate, that means the listing agent stands to receive a $250,000 payday if the property is sold.  A quarter of a million dollars.

And this is the best he can do?

I’m not entirely sure what a “non-slick, genuine, real” marketing flyer might be for this.  Maybe a variation on this:

House For Sale! $10M and its yours!

Granted, the client might be nonplussed if you were to do a set of hand-drawn posters for his $10M alpine palace, but hey, it would probably get people to read further.  It might even get some buzz going, because of its uniqueness.

A step up might be to do a bunch of handwritten cards on beautiful stationery and enclose a personally shot photo (not a professional job) with it inviting the recipient to inquire further about this amazing property.

If you’re not going that way, then you have to go all-out, and be so slick that the materials become noteworthy.  You have to impress the person seeing the marketing materials with the professionalism, the thought, and the production values.  Something more like this:

Why yes, I wear coats to the beach....

In fact, Corcoran routinely does some very nice things.  Take a look at this for example.  If you’re going to represent $10M properties on the web, something like that is slick enough to be a marvel.  It grabs hold of your attention, invites you to play with the cool Flash toys, and makes you marvel at the beautiful homes.  It’s like very high quality housing porn.

The lesson doesn’t apply, I think, only to the super-high end either.  Every house is still going to be some family’s biggest purchase.  It’s likely to be the seller’s biggest sale as well — a key event in that family’s life.  Don’t you owe it to the client to do more than slap together some hasty templated flyer that lands smack dab in the middle of the dead zone, neither authentic nor professional?

It is my considered opinion that quite a few real estate professionals would benefit from a regular diet of design books, magazines, and websites.  I particularly like The Dieline — a package design blog that is regularly updated, and filled with some of the most striking designs I’ve seen.  And no, none of the designs are of real estate flyers, but ideas could translate.  The usage of color can translate.  The thoughtful design can translate.

Whether you pursue the simple elegance of simplicity that forsakes commercialized slickness in favor of authentic human voice, or the blow-your-mind power of truly slick, marvelous designed materials, Godin’s insight is really worth some serious thought.  Stay out of the dead zone.

-rsh

I’ve been thinking a bit about the whole MLS 5.0 issue ever since Saul Klein’s post appeared. The reactions have been interesting. Greg Swann of BHB was somewhat cool to the idea, as evidenced by the title of his blogpost: The “MLS 5.0″ Manifesto: Everyone working in hi-tech real estate must oppose this vicious plan with every fiber in your being. Don’t be shy, Greg — tell us how you really feel. And now, Danilo Bogdanovic has posted a serious of questions (most of them rhetorical, I think) in which he “peels the onion of MLS 5.0” as it were.

Because I’m not an expert in MLS issues, some of the topics they bring up are beyond my ken. However, some of the questions and opinions are, to say the least, interesting.

Let us start with Greg’s take:

Here is the naked essence of Saul Klein’s so-called “MLS 5.0″ proposal:

The MLS of the future will bring a marketing service and benefit to the industry by being the single point of entry for listing data and then, based upon the election of the broker, distribute that information to web portals, newspapers, even radio and television, handheld devices and applications.

The emphasis was in the original, which is a nice illustration of how much Klein trusts you not to see what he’s up to.

What does that sentence actually say?

It says that Klein’s idealized “MLS of the Future” will be a national monopoly system controlled by real estate brokers and the NAR — to the immediate and permanent detriment of independent MLS systems and vendors, Web 2.0 listings aggregators and — most especially — individual real estate agents.

And Danilo’s take:

Call it what you will…MLS 5.0, Gateway, TREC, the greatest thing since sliced bread…I believe that this could potentially be the single worse thing to ever happen to the real estate industry (except for the very few elite at the top of the food chain and those that get into bed with them). If you’re an agent or small to medium-sized broker like most of us, then you should be seriously worried about your livelihood and future should this project materialize.

My take/question: What’s the problem exactly? Is it NAR’s involvement in this “MLS of the Future”, and the dislike that folks (and for the record, as a Hayekian Friedman acolyte, I’m very sympathetic to Greg’s principled position) have for NAR? Read the rest of this entry »

Angel by Lionel Richie.

I guess you could argue that part of Cluetrain means speaking with a human voice. And humans are deeply flawed, imperfect creatures. So I interrupt the real estate, marketing, and web 2.0 blogging to just expose really horrible personal habits to the whole world. Which in my case includes a soft spot for Lionel Richie.

I remember once arguing with a friend that Lionel Richie needs to be respected as a great musical pioneer of the 80′s, on par with The Gloved One, and Madonna. The man was a member of the Commodores, and had thirteen consecutive Top Ten singles, five of which were #1 U.S. singles as a solo artist. He’s been nominated for the Grammy’s 18 times and won four. He’s got a dozen American Music Awards, and five People’s Choice Awards for Best Song.

Plus, did you know he was a great tennis player and majored in economics from Tuskegee? I didn’t. Well, now I do, and so do you.

Lionel’s the man. Let’s have some respect for the curly-haired one!

Granted… he is largely responsible for Nicole Richie… but she’s still young. She may still turn out to be a great scientist who discovers the cure for cancer. Or perhaps a great world leader who solves the whole Palestinian issue once and for all. It could happen.

Plus, there’s this (from Wikipedia):

As ABC News reports:

Grown Iraqi men get misty-eyed by the mere mention of his name. “I love Lionel Richie,” they say. Iraqis who do not understand a word of English can sing an entire Lionel Richie song. He has performed in Morocco, Dubai, Qatar and Libya. There is obviously something up there. The more we talked, the more he theorized as to the reasons his music might be so popular here. He thinks it is because of the simple message in his music: Love. ^[5]

According to Richie, he was told that U.S. soldiers were playing “All Night Long” the night that Baghdad fell.^[5] Said Richie, “I’m huge, huge in the Arab world. The answer as to why is, I don’t have the slightest idea.”

Neither do we, Lionel. Neither do we.

But you just keep on keeping on’

-rsh

In light of this atrocious story, it might be time to think about some new initiatives. (H/T: Zillow Blog)

Not only is the bank owner losing any potential value in this property, but it will cost the bank an additional $10,000, “to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer’s closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.”

It is well past time for us to consider a new 21st century Homestead Act.  I wrote about this previously as well, but the sight of a $1 house is evidence that something dramatic needs to be done.

• Rough outline of a new Homestead Act:
• Banks surrender the property to the municipality.  They can claim a loss for future tax writeoff, but importantly, they get the property off their balance sheets.
• Municipality waives all back taxes, transfer fees, etc.
• Utilities write off all water/electric bills, etc.
• Property is made available as is to any legal resident willing to live there.
• You must stay in the residence for at least five years.
• During your stay, you must maintain the house in reasonable condition and not engage in any illegal activities in the house.
• It must be your primary residence for those five years.
• You must pay all property taxes and fees associated with homeownership, such as for trash removal, water and sewage, etc.

At the end of the five year period, the homesteader receives full title to the property free and clear.

In a stroke, you have eliminated the foreclosure problem, provided a path out of urban blight issues, and provided low-cost housing to families who actually want to work at achieving their American dream.

It’s time.

-rsh

Am I being dramatic enough here?

Thanks to a comment on my About page, I thought to look into the dance going on between CoStar and Reis. It’s fascinating stuff, actually. If the story weren’t being told through boring press releases, SEC filings, and dated news clippings, it might make for a great opera, full of passion and melodrama. As a matter of fact, I wrote a little story — it’s at the end of this monster post.

At least, I think it would, based on what little I can tell as a totally uninformed outsider who has not been following the story. But hey, when did being uninformed ever stop your faithful scribe?

The latest chapter in the tale is that CoStar has reiterated its offer to buy Reis for $8.75 a share earlier today (the press release is dated 2:38PM on Wed, August 13, 2008), for the total price of $96.1m. An important point here is that CoStar made the exact same offer back in June, and was rebuffed. A mere ninety minutes later, Reis rejected CoStar’s offer for the second time (the press release is dated 4:01PM, Wed, August 13, 2008), saying:

In the view of the Board, the price offered in the CoStar proposal is inadequate. The price is below the long-term value REIS could realize for its stockholders by the pursuit of its business as an independent entity and the continued disposition of its real estate assets, or by a sale of the Company.

Mr. Lloyd Lynford, CEO of REIS, stated: “It is extraordinarily disappointing that, after our Board unequivocally rejected CoStar’s $8.75 proposal, CoStar has seen fit to come back with exactly the same proposal in a hostile fashion. To judge the value of our company by the daily trading prices of its relatively illiquid common stock makes no sense. We trust that our clear second rejection of CoStar’s offer will prompt CoStar to withdraw it. Our Board will, of course, review carefully any serious proposal from any responsible third party.”

I believe words like “extraordinarily disappointing” and “unequivocally” and “makes no sense” are corporate chieftainspeak for “Fuck off, you loser!” Reading between the lines, you can almost feel the heat.

Initially, I was really puzzled. In normal course of business, getting a 97% premium over the last stock price (which hasn’t moved at all until the offer came in) is cause for celebration and a rush to the alter lest the groom come to his senses. I mean, imagine that your house was valued at $300,000 and some dude rolls up and goes, “Hey, I’ll give ya $600,000″. That’s normally a “Honey, start packing — we’re moving!” type of thing. But Reis was like, Talk to the hand:

The price is below the long-term value REIS could realize for its stockholders by the pursuit of its business as an independent entity and the continued disposition of its real estate assets, or by a sale of the Company.

Okay, so like, let’s go with that.

I spent the last 30 minutes or so of my life looking at stock charts and old new reports and such. Frankly, I hadn’t known that Reis was a public company at all. Back when I was still in commercial real estate, Reis was privately held, or so I remembered. Read the rest of this entry »

I added a new blog to my RSS reader today, as it is one of the better ones I’ve found that is precisely on topic for me and my interests. Real Lawyers Have Blogs is really, really good — it deals with topics of marketing, web 2.0, firm marketing, etc. but in the law. I cover the same topics, but it in real estate. And as some of you know, I believe there are many things that the real estate profession could learn by watching the legal profession.

Kevin, the proprietor of Real Lawyers Have Blogs, has an excellent and timely post on comment spamming. As I have to go in and clean out dozens of blog comment spam from random desperate realtors on this blog, I thought to share the key paragraphs with you. But really, seriously, read the whole thing.

There’s lawyers who don’t care how they get the next client or case. Whether it comes via an ad above a urinal, a two page spread in the yellow pages, or a referral from someone who thought the lawyer was pretty good, they just don’t care.

In fact some lawyers would rather see their name at the top of search results or on the back of a phone book than have a reputation as a trusted and reliable authority in a niche area of the law. Wonderful that these cads are in the same profession as you and I who went to law school to right a few wrongs and to take pride in what we do.

Replace the word “lawyers” in the above paragraph with the word “realtors” and the words would still ring completely true.

Over the past several months, as I have gotten deeper into the residential side of real estate, I have come to understand that there are many incredible realtors who take their profession very seriously. They know their stuff, they can truly advise both buyers and sellers, and they do their very best to provide valuable service to people on the most important financial transaction of their lives. And then, you have cads and morons who couldn’t care less. Simply put, those people need to be driven out of the industry in the same way that some lawyers need to be driven out of that industry.

Near the top of my personal list are the blog comment spammers. As Kevin puts it (quoting Scott Greenfield of Simple Justice) :

In the course of a day, I get one individual posting a dozen comments to miscellaneous old posts without any apparent nexus to each other or the geographical or subject matter area of the lawyer. Each will link back to this ‘Miami Lawyer’s’ website. But here’s the rub: The comment is written in broken English and fails to demonstrate any knowledge of the content of the post.

Example: Greet to the webmaster for this wonderful site.Keep up good work.

This is the actual comment left yesterday. To the Miami Lawyer who paid someone to leave this comment and link to his website, this word of advice. It makes you look like a blithering idiot. Is that what you are trying to accomplish?

Yeah, what he said. Thank goodness for Akismet, which has caught over 700 spam comments. And of course, you get the automated “Notorious ROB wrote about XXX topic” followed by a wholesale scrape-job of one of my posts on some site with a name like MakeMoneyInFloridaRealEstateToday.com.

Seriously, that makes you look like a blithering idiot. Stop it. Cut it out. And please, go away.

The culprit is often some “social marketing services firm” that promises you better Google search rankings, more traffic, etc. by linkfarming and comment spamming and other unsavory tactics. Again, here’s Kevin (quoting Scott):

And for lawyers buying SEO from guys that sound and behave like crack cocaine dealers, follow Scott’s advice.

…[A]s a public service to anyone foolish enough to pay good money to some advertising ‘solutions’ company that outsources its work to people who will make you look far more pathetic than you are, let me say this. Don’t do it.

You are wasting your money. You are not going to get any cases from comments that make you look stupid. You are going to have your comments deleted, and then I’m going to ban you from here.

If you’re really trying to market yourself by establishing yourself as an authority in the legal blogsophere, do it the old fashioned way. By working at it.

Could not have said it better myself.

-rsh