Monthly Archives: June 2010

All Your (Data)Bases Are Belong to Us

If you’re responsible for real estate brokerage operations, you owe it to yourself and to your company to read this post by Glenn Kelman at Redfin.  I have said for a while now that I believe Redfin to be one of few viable models for real estate brokerage of the future, and this post helps confirm that belief.  It’s a long post, and worth reading in full, but here’s the money graf:

But outside of calling one agent after another, the CB CEO has no way of knowing what his agents are doing; most work as contractors, for franchises, recording their deals in spreadsheets and notepads. Redfin on the other hand has a system for scheduling home tours and writing offers, which means we also have a system for storing data about every tour & offer. Months before the numbers are recorded at county courthouses or by federal agencies, we know when bidding wars are back, or when tire-kickers have taken over the market. We can see the whole elephant, and we’re minutely sensitive to when he’s about to roll on top of us or stampede through the jungle. [Emphasis added]

Fact is, far too many real estate brokerages pay lip service to the importance of technology.  Even the ones who do invest are putting money and resources towards marketing technology rather than information technology.  In the long run, I think the companies that survive the Great Recession will be ones who invested in information technology, rather than just another pretty website. Continue reading

Cookie Cutter and The Cookie: Differentiation in Real Estate

The incredibly smart, sometimes bearded, Gahlord Dewald has a post up on Inman (will go behind paywall in 24 hours) in which he counsels brokers and agents to “break free from cookie-cutter real estate” by paying more attention to categories of information and data:

Think your brand is different from your competition? Go look at the categories for real estate on your site then go look at the categories for real estate on your competition’s sites. See any difference?

This isn’t a case of tools not existing. Categories are an inherent function in every database-driven content management system out there.

But a quick tour of real estate sites will reveal that most of these systems have been set on autopilot to mimic the same categories that were used for real estate in — you guessed it — newspapers.

His recommendation is to rethink the categories for a real estate search website, perhaps to better “narrowcast” information to a specific segment of the audience.  It’s an interesting approach, and one that I’ve recommended to others in a slightly different context via persona-based marketing, but… the post made me wonder about something.

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Mortgage Interest Tax Deduction Go Bye-Bye?

A while back, I wrote on Inman (subscription required) that the single greatest asset of realtors was political power, and got mixed comments about that position.  Well, the time to find out is upon us:

The popular tax break for mortgage interest, once considered untouchable, is falling under the scrutiny of policymakers and economic experts seeking ways to close huge deficits.

Although Congress last year rejected the White House’s proposed cut to the amount wealthier taxpayers can deduct for home mortgage interest payments, the administration included it again in its 2010 budget — saying it could save $208 billion over the next decade.

When NAR lauched last year, one of the examples it used to talk about how important would be was defending the home mortgage interest deduction.  With the Obama Administration putting the elimination of the mortgage interest deduction back on the agenda for 2010, it’s time to find out just how powerful NAR is, and whether NAR does in fact add value to the Realtor or not.

Plus, given that the “recovery” of 2009 and spring of 2010 (I have my doubts on how much of the recent market is a recovery vs. simply pulling deals forward in time, but nevertheless…) was widely seen as having been fueled by a $8,000 first time homebuyer tax credit, the elimination of the mortgage interest should have interesting — if devastating — consequences for the market.

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Trulia’s Rent vs. Buy Index: Fun With Numbers

About a week ago, the good folks at Trulia released their “Rent vs. Buy Index” of the largest 50 U.S. cities by population.  The full list of the 50 cities is available here as a PDF.  Given the current economic trends, and the rising interest by consumers for rentals, this is a great time for people in real estate to be talking about renting vs. buying.

Trulia didn’t post their full methodology but it does look like they did a good deal of work.  From the blogpost describing the Rent vs. Buy Index:

Total costs of home ownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.

Total costs of renting include rent and renter’s insurance.

Based on these factors, Trulia concludes:

Price-to-Rent Ratio of 1-15: It is much less expensive to own than to rent a home in this city

Price-to-Rent Ratio of 16-20: It is more expensive to own a home in this city are The total costs of ownership of a home in this city are greater than the costs of renting, but it might still make financial sense depending on the situation.

Price-to-Rent Ratio of 21+: The total costs of owning a home in this city are much greater than the costs of renting.

The analysis was for 2BR apartments, condos, and townhomes — so the rent/buy for single family residences might be different.  But the index is a useful tool nonetheless.

Since I’ve written on the rent vs. buy decision before, I thought it would be interesting to look a bit closer at the ratios — although I don’t have the actual numbers that Trulia used — to see what, if anything, might pop out.

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Power Agent Teams, Revisited

"A" in A-Team stands for Agent?

In 2007, Ralph Roberts, then the “official spokesman” of Guthy-Renker Home, published a brief essay on RISMedia called “How to Soar High with Power Agent Teams“.  In it, he recommended an approach to teaming that is much more based on division of labor and functions:

I was recently flying home from the National Association of Realtors convention in Las Vegas, and I began thinking what would happen if airlines followed the same approach that most Realtors practice. I would call the airline to book a flight, and the pilot would answer the phone. When I arrived at the airport, the pilot would check me in, check my bags, follow me to the inspection point to make sure I wasn’t trying to carry any prohibited items on the plane, and then escort me to the gate to make sure I boarded the right flight and secured a seat.

He also wrote a book on the topic, which I havent’ read so it may be that many of my questions and thoughts are answered there.

Nonetheless, with more and more brokerage companies enabling agent teams of various kinds, and more and more successful agents creating de facto agent teams by hiring administrative assistants, listing coordinators, transactions managers, and the like, it appears that the ideas of “Power Agent Teams” have taken firm root in the industry.

Those ideas, however, have not been fully developed to their logical conclusions — at least not yet by anyone I’ve read or heard from in the past three years.  I’d like to revisit the topic, therefore, to sketch out some consequences of the Power Agent Team idea and pose some questions.

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