Monthly Archives: March 2011

Be Wary of the False Spring in Real Estate

2 Replies

Shiny happy people!

Real estate people are some of the most optimistic people I know. They have to be in order to work a business in which they don’t make a penny without a transaction getting done, and the driving motivation for the consumer is a dream: The American Dream, the Dream of Homeownership, Your Dream Home. Real estate, to some extent, is about dreams, hopes, and visions of white picket fences, kids playing in the backyard, and tasteful interior design reflecting your success in life.

So I generally do not fault real estate agents when they put forth honest opinions that perhaps we have finally hit bottom in this historically ugly housing crash. They’re not being disingenuous; they’re simply optimists.

At the same time, in the current market/environment, I believe a professional has to caveat every positive and be extremely wary of false signals. We’ve already had one false signal when the First Time Homebuyer Tax Credit artificially shifted demand forward, thereby leading some people to claim we’d seen the bottom of the market. Of course, when all that demand dried up, the housing market continued its downward slide.

Jim Walberg, and Ira Serkes, both exemplary professionals with years and years of experience, who know their local markets, and analyze the sales data personally, recently suggested that some markets are turning around. And yes, since every market is different, every market is local, you should call your REALTOR for more information or whatever it is that the NAR commercial says. So please don’t bother commenting/protesting that trends don’t mean anything in your particular local market: I know.

Nonetheless, any reasoned analysis of calling the bottom has to take at least the following factors into account, at the very least as a risk.

Continue reading →

This Way Lies Victory: Fixing NAR’s Political Survival Initiative

5 Replies

#WINNING!

Since I broke the news of the new NAR REALTOR Party Political Survival Initiative (“#RPPSI” hereafter, as that is the Twitter hashtag as well) on Tuesday, the response has been really quite interesting and overwhelming. Various people have written blogposts on the subject. As of this writing, I know of the following posts:

And there are dozens if not hundreds of comments on Twitter (#rppsi hashtag) as well as Facebook. I’ve also gotten dozens of direct messages, emails, and Facebook messages from various points of view.

On the whole, the responses trend negative, and for the reasons I laid out in the first post. Yet, despite the skepticism towards the #RPPSI initiative itself, the discussion as a whole is truly encouraging: REALTORS are finally engaging with each other on a topic that is critically important, learning some more details about what is going on, and debating pros and cons in a remarkably collegial way (for the Internet, anyhow).

I do have a few followup thoughts, now that I’ve had a chance to think about the initiative and my initial reaction some more. I think NAR is doing a very dangerous, if necessary, thing with #RPPSI. But with a simple tweak, it can become a great thing that would set up victory after victory for NAR, for homeowners, and for REALTORS.

Continue reading →

Mortgage Litigation on the Rise

Leave a reply

I’ve been writing about the mess that is Foreclosuregate on this blog, on Notorious, and on AOL Real Estate. And something I worried about (yet predicted, hoping to be wrong) was that we’d see significant lawsuits against banks, servicers, and MBS sponsors brought by homeowners and investors.

Well, it appears that mortgage litigation rose significantly in Q4 of 2010:

Servicing litigation cases rose by 21 cases in the fourth quarter, from just five in Q3. Mortgage Daily reports that servicing was busier because foreclosure lawsuits in Q4 nearly doubled the amount from Q3 and modification activity climbed 208 percent.

Investor lawsuits also doubled from the third quarter, which the news organization surmises was because of a similar increase in litigation associated with mortgage-backed securities.

Even if we assume that the State Attorney Generals will reach a settlement with servicers, I don’t know that it would bar private litigation by homeowners and investors. There is a tipping point past which the big plaintiff’s law firms who take on mass class action lawsuits (mesothelioma, anybody?) get involved and start running radio and TV ads asking people, “Have you lost your home to foreclosure? You may be entitled to money damages! Call now!”

Of particular concern is the increase in investor lawsuits, as Antony Laura of Patton Boggs explains:

“While the increase in servicing cases is stark, the increase in suits by investors alleging missteps in the origination and securitization process is especially worth noting, as hundreds of millions of dollars are often at stake in those loan portfolio repurchase cases,” Laura explained.

Actually, it’s hundreds of billions at stake, and we enter the realm of systemic risk.

Oy. Otherwise, a cheery top o’ the mornin’ to ye, guvnor!

-rsh

Should Social Media Be Taught to Everyone?

12 Replies

With great power comes great responsibility

I was reading some Facebook status updates — signifying that obviously, I’m not a total social media moron who hates all things social — when I came across an interesting little comment:

The post that Eric Bryant and Maya were talking about is this one by Jeremy Blanton. His conclusion:

I think in the case of these three the message is clear, social media can take your business and explode it to a whole other level. People realize the importance of social media in their business plan and it was evident by the packed classes that had anything to do with social media.

A lot of conversations — eternal ones, it appears — about social media as marketing is about whether it’s effective.  Maya Paveza, a good friend of mine who was on that panel, threw down on Mike Ferry recently because Mike disparaged the efficacy of things like Twitter and Facebook (well, and she thought he was rude).

But let’s have a different conversation, because I’m sort of bored with the “social media works/social media is fool’s gold” stuff. Let us take as given for this discussion that social media is the single most effective marketing strategy ever invented for real estate. Let’s assume that it will take a real estate agent’s business and explode it to the next level.  Okay? Okay.

My next question: should social media techniques be taught to everyone or kept secret for the chosen few?

Continue reading →

BREAKING: NAR Launches a Political Party, Risks Its Future

67 Replies

At the 2011 Association Executives Institute meeting in Dallas, NAR has put forth a bold if risky plan it is actually calling the “Political Survival Initiative“. In short, NAR will launch a “REALTOR Party” that will go beyond simple issue advocacy to full-blown political support for individual candidates based on issues NAR considers important (e.g., mortgage interest deduction, financial support for housing, state transfer taxes, etc.). Please view the presentation, the talking points memo, and the NAR legal memo on Citizens United if you are interested in detail. Or just keep reading then decide if you are interested.

My initial take is surprise combined with real concern. This Political Survival Initiative could either be the most brilliant thing that NAR has done in decades (having done little to nothing with HouseLogic, that is), or be the first step towards total irrelevance. It’s a big risk. I may have to revise my opinion about NAR 800K to something closer to NAR 400K, which is not necessarily a bad thing, but the face of organized real estate could change rather dramatically, and rather soon.

Continue reading →

Have You Seen Me? The Role of the Broker in Contemporary Real Estate

24 Replies

Okay, maybe 1930 is going a bit too far back...

One of the most insightful set of comments I’ve ever read on this here blog (remember, I usually learn more from writing this blog than I ever “teach”) is to my last post about technology-loving agents. As it happens frequently around these here parts, at the same time I was being enlightened by you, the commenter, I was also looking at two other things.

The first is this Mike Ferry vs. Mike Ferrara Smackdown debate (ht: Chris Smith, @TechSavvyAgent) at Coldwell Banker’s recent convention. Watch at least the first 20 minutes or so; it’s pretty engaging, entertaining, and enlightening:

The second is this incredibly well-written post by Jeff Brown, who also takes me to task periodically and teaches me things here on Notorious.

Here’s my point/question: Where is the broker in all of this conversation?

In the entire 32 minute long debate between Ferry and Ferrara, has either gent used the word “broker” even once? I missed it if they did. In all of Jeff’s wonderful post, does he mention the word “broker” at all? No.

Quite a few of the commenters on the technology and agents post expressed all sorts of reasons why technology was so important. And they make some great points. I agree with many of them. But did any of them ever mention the broker? No. And some of them are brokers or managers themselves.

This conversation about technology and the REALTOR reveals that what is at stake is the notion of the real estate agent as a professional saddled with, and deserving of, fiduciary duty. One of two things has to change: the dominant business model of contemporary real estate, or the idea that real estate is a profession.

Continue reading →

What’s up with REALTORS Who Love Tech?

35 Replies

I forgot an angle on this post about agent ratings and consumers that’s more in line with the light and snappy flow of this blog.

As the NAR survey, flawed as it might be, shows, consumers overwhelmingly want these skills/qualities in a REALTOR:

  • Honesty and Integrity – 98%
  • Knowledge of purchase process – 96%
  • Responsiveness – 93%
  • Knowledge of real estate market – 92%
  • Communication skills – 85%
  • Negotiation skills – 84%
  • People skills – 79%
  • Knowledge of local area – 79%

The one quality that majority of consumers don’t care about? Skills with technology, at 40%.

So here’s my question.

The REALTORS who love, love, looooove technology, and spend most of their time talking about and studying/learning Facebook, Twitter, SEO, QR Codes, augmented reality, mobile technology, iPhone apps, and the rest of it… should I be assuming that y’all have the top eight skills/qualities mastered?

When I go to a REBarcamp and see literally hundreds of young REALTORS who couldn’t possibly have more than 5-6 years of experience in the business, should I assume that they’ve learned all they can about the local market, knowledge of purchase process, and negotiation skills, such that the only thing left to learn is technology skills?

If the answer is “Yes”, then followup: Is real estate really that easy? Why does a consumer need to pay tens of thousands in transaction fees if it is?

If the answer is “No”, then followup: Why would a professional spend so much time and energy learning things that their clients have said they don’t care about?

What do you think?

-rsh

Agent Ratings Must Be Done by Other Agents

18 Replies

Zillow.com's Agent Ratings Product

Agent Ratings is in the news again. MLSListings, based on Sunnyvale, California, has announced that it will launch a pilot REALTOR ratings program with the California Association of REALTORS. But it appears that the MLSListings program isn’t what HAR attempted to do a while back, where consumers directly rate agents:

Designed by independent consumer review agency Quality Service Certification (QSC), the program collects and evaluates feedback from both buyer and seller clients in the months following the home sale, and provides information to brokers and agents to help them better evaluate and market their services to consumers.

Given QSC’s involvement, I imagine the ratings system will be something we haven’t seen yet, which is interesting.

At the same time, NAR has just published an interesting factoid from its 2010 Home Buyers and Sellers Profile (free if you’re a REALTOR). It is a table of qualities and skills that home buyers have rated as being “Very Important”:

REALTOR skills buyers rate as Very Important

This chart is likely flawed from the way the question was asked (although I don’t know, because I haven’t seen the original survey question and options for answering). Nonetheless, it provides support for the proposition that consumers are totally unqualified to render any meaningful evaluation of a real estate agent. As a result, any agent rating product that wants to assist the consumer must incorporate ratings by other real estate professionals.

Continue reading →

Guide to Surviving Feral Internet Mobs

9 Replies

More dangerous than a pack of feral bloggers...

In my continuing quest to get something positive out of Zebragate, I would like to offer some tips on how you could survive attacks by the feral Internet attack mobs who dare post hurtful things on blogs and Facebook and such. Some of the things that The Lones Group has done in response to the “cyber-mob” provide us with real lessons for online reputation crisis management, and for being willing to provide such examples, I believe we owe them — and their supporters — a real thanks. It isn’t every day that we find such selfless giving from a marketing consultant apparently willing to show all of us how not to react to online criticism.

Continue reading →

Turns Out, Smart Money Does Know Things

1 Reply

On my 7DS blog, and on AOL, I wrote about the phenomenon of super-rich people paying cash for expensive ($5m plus) homes in California. And I wondered what it is that they knew that the rest of us didn’t. Here’s the post on 7DS, and here’s the one on AOL.

Well, turns out, the rich do know things we don’t. The largest bond fund in the world, PIMCO, is dumping U.S. government bonds:

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits.

Apparently, Bill Gross thinks the interest rate is too low on Treasuries given the risks. Risks? Aren’t US Treasuries supposed to be “risk-free”?

Not when you’re running monthly deficits in excess of $220 billion and printing money to deal with it.

Turns out, what Gross is expecting is inflation. He is quoted in a March 4th radio interview on Bloomberg as follows:

Gains in so-called headline inflation matter more for the U.S. economy than Fed Chairman Ben S. Bernanke suggests and rising oil prices may cut U.S. gross domestic product by a quarter to half a percentage point, Gross said March 4 in a radio interview on “Bloomberg Surveillance” with Tom Keene.

“Bernanke tends to think this doesn’t matter — at least in terms of headline versus the core — we do,” Gross said.

I speculated that the reason why the rich were paying cash was that they were expecting significant inflation. The super-rich are far more likely to have access to people like Bill Gross than you and I. Higher interest rates would be the result, and declining value of cash. Since mortgage rates (like all bonds) track US Treasuries, we all can expect higher rates at some point in the near-ish future to compensate for the effect of real inflation.

Turns out, now IS a great time to buy a house. But only with fixed rate loans or with cash. Failing that, gold, ammunition, canned food, and anti-biotics.

Cheers!

-rsh