Thanks to Robert Luna of Diverse Solutions for alerting me to this article on CNNMoney.com about using instant messaging to interact with customers online.  Consider this anecdote from a Park City, Utah broker:

Now some savvy website operators are finding that, when used tactfully, it can be a powerful way to boost sales - not just as a passive customer-service tool but as a way to engage customers, in the manner of a showroom salesperson. Erik Asarian, a real estate broker in Park City, Utah, installed a live chat box a year ago and credits it with adding $12 million in sales. “It’s become an amazing new profit center,” he says.

The key is figuring out how to tactfully put yourself in front of passers-by without scaring them off — which is, of course, the same conundrum faced by offline sales people.

Think of the last open house you did.  Some people wander in, volunteer their name and intent, and are more than open to conversation.   Others come in and prefer to have some space.  Still others are reticent, but open up when they see you aren’t going to bite.

Same thing goes online.  With certain online chat tools like Meebo, for instance, you can see how many folks are currently looking at your web site, and you can engage them if you so choose.

It’s a delicate act, however.  It’s easy to come across creepy and big-brother-ish.  Many website visitors don’t have a clue that their presence can be monitored, much as in an offline store.  The recommendation, according to the CNNMoney.com article, is this:

To be a successful “closer,” a merchant first has to learn how to use live chat to create trust. Instead of pinging visitors with a standard greeting like “How may I help you?” - which many potential customers correctly interpret as nothing more than a sales come-on - Galper suggests a subtler alternative: “Hi, my name is Ari, sorry to interrupt… just wanted to make sure everything is making sense so far…” (Another basic IM sales rule: Never use periods; opt instead for the more conversational ellipsis.)

Fellow bloggers — any thoughts on using chat windows to engage visitors?  Should you wait for them to reach out to you with questions?  Or is it appropriate to try to engage with them first?

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The time between Thanksgiving and the New Year — actually, often until early February — is traditionally a pretty slow time of the year. With most people’s minds on the holidays and skiing in Tahoe, not many are thinking of buying or selling, and many Realtors take advantage of the lull to kick back, maybe do some skiing themselves, and perhaps do some planning for the new year.

This year looks to be much the same, with perhaps even less to do for Realtors. Inventory typically drops dramatically between November and January: though there are few buyers out and about, there are even fewer sellers, so the available stock of homes gets steadily whittled down. With inventory already at around half of what it normally is, the holiday season this year promises to be even slower.

As this chart from our friends at Altos Research shows, inventory of single family homes for sale in Palo Alto dropped from about 90 in November 2005 to about 40 in January 2006; similarly, it dropped from about 80 in November 2006 to about 25 in January 2007.

Here we are at the tail end of November, and inventory right now stands under 40. Not much of a selection for buyers, but what is out there probably will get steadily eroded, and the New Year may see only 15-20 homes still available.

Interestingly, both the most expensive and least expensive homes currently on the market are on Arastradero Road:

• 730 Arastradero Road, Palo Alto, is a tasty little 900 sq ft morsel on a lot size of just under 10,000 sq ft, brought to us by Celia Bella of Coldwell Banker. Price? Just under $1M.
• Those with some Google stock options to spend might want to consider 1781 Arastradero, (also in Palo Alto) a mile West-Southwest of its junior sibling, brought to us by Meera Gupta, also of Coldwell Banker. Its views, 13 acres, 11,500 sq ft of living space (not, I suspect, including the guest house), plus seven bedrooms and 10.5 bathrooms will set your average Googler back a scant 43,000 shares, or $29,850,000.

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The Fair Oaks neighborhood in Menlo Park is well known for its traffic-slowing British-style “roundabouts”, specifically designed to slow down those impatient folks trying to skirt around the busy traffic on Middlefield and Marsh. What these busy folks tragically miss when they speed through the neighborhood is the wonderful community-owned and cared-for park.

Located on Fair Oaks Avenue, just before it curves and then dead-ends into Edison, this park was started and funded by local residents. It’s a small park, not very ambitious, but very comfortable and homely, with a small basketball court, a number of swings, a sandbox, a jungle gym, and a few other distractions for the kids.

On any given day you’ll see an assortment of local moms, dads, and nannies, all carefully shepherding their little charges as they bustle about on the important business of childhood. This is a park where the neighbors meet, where friendships are struck, where adults get to laugh at the kids’ amusement. It is, in every sense of the word, a community park.

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We Realtors are full of advice on how to do certain things, like, oh, selling your house.  Here’s a contrarian list, to be followed only by those intent on not selling their house.

10. Stage it like your good ol’ great-grandmother from the old country would have.  After all, if that Dutch Delft Tchochkey was good enough for her, it ought to be good enough for a prospective home buyer!

9. Refuse to have open houses.  I mean, hey, weekends are for watching sports games.  Let the prospective home buyers find a time that’s not inconvenient for me.

8. Refuse to have your agent list it in the local MLS.  I don’t want all the neighbors to know I’m selling my house!  And hey, isn’t that why I hired a Realtor anyways — to market the home?  Shouldn’t need the MLS for that.

7. Refuse to have your agent put a lockbox on the property.  Too much of a security risk.  Somebody might come and swipe said Dutch Delft Tchochkey.

6. Insist on keeping your flock of Doberman Pinchers inside the house.  Again, need to protect said Dutch Delft Tchochkey.

5. Put the “For Sale” sign in your back yard … upside down.  Don’t want passers-by to know my home is for sale.

4. Hire your cousin’s ex-boss’s ex-wife’s ex-boyfriend (himself an ex-con), who lives 500 miles away, to represent you.  After all, it’s more important to hire somebody you have a connection with than a real local professional.

3. Insist on a buyer’s agent commission of $50. After all, the buyer can pay for his own damn representation!

2. Paint the house a refreshing shade of bright pink.  Great-grandma loved it.  ‘Nuff said.

1. Overprice the home. No other homes have ever sold for more than $1M in my neighborhood, but clearly, my home is worth $1.5M.

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In the pantheon of lender horror stories, this one may not even make the “honorable mention” list, but it cost a deal nonetheless…

The loan officer was a “friend of a friend” of my clients who had promised them a “really good deal.” My clients, avid deal-sniffers, loved the sound of that. I, on the other hand, didn’t. I exercised my prerogative as their agent and grilled the loan officer. She was, to put it mildly, a tad too casual for my taste. “Yeah, I can probably get them a loan at 5%,” she said. “Yeah, I can probably complete it in 28 days. No worries!” “No, I haven’t yet pulled their credit score, but, hey, it’s only been 5 days since they submitted their paperwork.”

I voiced my strong concern to my clients, but they decided, against my better judgment, to proceed with her.

Sure enough, the deal fell apart. Literally the night before we were supposed to remove financing contingencies, my clients called me up in a panic. “I can’t believe this! She had promised us a 5% loan, and now she’s quoting us 7.5% and telling us it’s still a deal! She’s saying we should take it, and then refinance later on.”

A quick phone call to the loan agent confirmed the worst: not only was she incompetent, but she was also, well, just a tad slimy. Classic bait and switch: quote a low rate, get the client to sign up, then pressure them at the last minute to accept a higher rate.

I called up my regular lender, who performs lending miracles as a matter of routine, but even she wasn’t able to pull this one off.

We had to cancel the deal.

Moral of the story: if it sounds too good to be true, it probably is. If the loan agent sounds incompetent, she probably is.

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As part of my ongoing involvement with foreclosures and how to buy them, I get asked lots of questions. One that comes up frequently is, “When buying a foreclosure at auction, do I have to pay off all the liens?”

The answer is, “It depends on the lien priority.” What is lien priority, you ask? Well, properties always have a Title document that shows who or what entities have an interest against that property. Each interest is recorded in chronological order:

• First and foremost, County property taxes are always in first position on Title (we all know that there are only two things for sure in this world - death and taxes).
• Second is usually a lien for supplemental taxes, based on any new assessed value.
• Third is usually for neighborhood CC&R’s (Covenants, Conditions and Restrictions) which govern how you can and cannot use your property in that particular development, neighborhood or homeowner’s association.
• Fourth position is sometimes for easements (which is a right for someone else to use a portion of the said property), for example for the gas or electric company to come onto your property and read the meter, or for a land-locked neighboring property to have a driveway run along the edge of your property in order to gain access to theirs.
• Fifth will normally be for the first mortgage holder, if there is one.
• Sixth would be for a second mortgage, if there is one.
• Seventh would be for any additional mortgages
• Eighth would be for any other interests against the property, such as a Mechanic’s Lien (i.e. that contractor who installed your new bathroom, but whom you failed to pay)

If the first mortgage holder is the one doing the foreclosing, and have brought the property to auction on the County Courthouse steps, then all the subsequent liens (called junior liens) are wiped out! If the lien holder down the line, the contractor who never got paid for the bathroom, for example, is the one doing the foreclosing, and you buy the property at auction, then you need to pay off all the liens that are above him (called senior liens). In that case, you would be responsible for paying off the first, second, and maybe third liens as well as HOA dues and county taxes. So be very careful when buying a foreclosure property at auction - do your research! You can always go down to the County Recorder’s Office in the county where the property is located (usually in the county offices or at the city hall) to research all the recorded liens against a specific property - this is public information.

Every week, I send out the list of Notices of Default and Notices of Trustee Sale for foreclosure properties in Alameda, Santa Clara, San Mateo & San Francisco Counties. If you would like to be included on that list, you can sign up here.

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It’s hard impossible to grow up in a former British colony in Africa — at least this one — without becoming an avid soccer fan. (In answer to your next question, no, I am not responsible for this.) What I am responsible for is this week’s Carnival of Real Estate, and since that means I get to write this week’s rules, I have decreed a “World Cup Soccer” theme, and, in a nod to the continent that missed birthing me by 6 weeks, but where I nonetheless spent 2/3rds of my life, the theme specifically is “World Cup Soccers stars of African origin.”

The world’s most famous soccer player ever is arguably Edson Arantes do Nascimento, better known as Pelé. But wait, you say, isn’t he Brazilian? Indeed he is…but I sidestep that one nicely by pointing out that he is of African origin.

The Pelé award this week goes to Danilo Bogdanovic of Real/diaBlog with the discouragingly-titled but well-written post How To Be A Successful Agent In One Of The Worst Real Estate Markets Ever. While Pelé was well-known for taking nearly impossible situations and turning them into artful goals — witness his famous goal from behind the halfway line when he took advantage of an errant goalkeeper — Danilo recommends turning the difficult situation in many markets into a profitable business. He says:

With foreclosures on the rise, agents should be reaching out to lenders and banks to get on their “approved list” in order to sell their foreclosure listings. Foreclosures are going to be a key part of every successful agent’s business strategy over the next few years…

[On the buy side] agents should be focused on investor clients to take the place of the missing traditional buyer traffic.

The second place award, named after Liberian international soccer player-turned-public-servant George Weah, goes to Jim “Real Estate Tomato” Cronin for his article What is the Future of the Real Estate Blog? Weah put his knowledge, talent, and finances to work for his war-ravaged nation Liberia; Jim Cronin, on the other hand, churns out a steady stream of articles of great help to the real estate blogging community; this article is simply one example. He highlights some future trends — for example, video — and some future pitfalls — for instance, broker-domination, and Google’s finicky-ness.

The third place award is the Zenedine Zidane “I’m Sick and Tired of Your Behavior and I’m not Going to Take it Any More” headbutt-into-reality. Ines Hegedus-Garcia writes Home Sellers Can’t Handle the Truth and rants about sellers choosing a Realtor not on the basis of skill or truth-telling, but on the basis of making unfulfillable promises. Unlike Zidane’s headbutt-inspired send-off in the finals of the last World Cup, we applaud Ines’ attempt to head-butt sense into stubborn sellers. (Sidebar to purists: Zidane, though on the French team, is of Algerian origin, and hence fits with the theme.)

Among the remaining 20 articles, an honorable mention stood out:

The Nwankwo Kanu award, bestowed on the author with the article most reminiscent of Nigerian International Kanu’s fabled creativity on the field, goes to Scott Ficek with Reverse Prospecting for Tenants. Who hasn’t thought of using Craigslist to list properties, to find properties, or to find a rental? Scott suggests using Craiglist for something completely different — reverse prospecting for tenants.

Thanks to everyone else for your contributions!

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Though the news only made a blip on the real estate blog radar screen, Curbed.com’s recent $1.5M round of funding has profound implications for the real estate business. First, it signifies that blogging is rapidly growing up in this industry. Secondly — and more importantly — it may be a sign of history repeating itself.

In the late 90’s and early 2000’s, an interesting transition took place in real estate. The MLS, which until that point was literally a book, published weekly or so, that was dropped off on broker’s doorsteps. If anybody — broker, agent, member of the public — wanted to see the current housing inventory, they had no choice but to go down to the local brokerage office and take a look. The MLS was, essentially, an intellectual asset being leveraged as a marketing asset. Want to know more about real estate? You’ll have to call me!

Along came this thing called the Internet, which is genetically opposed to locking down information. Gradually, and with much trepidation about the wisdom of doing so, the industry let go of the MLS book and started putting the content online. More or less simultaneously, “outsiders” like HomeGain, Homes.com, Housevalues, etc. started inking deals with MLS’s and large brokerages and also started putting the MLS online.

We know the rest of this story…the “outsiders” did a significantly better job of managing this transition, created much more compelling destinations, and got much more traffic — so much traffic, in fact, that they began to make money by selling leads…back to the industry.

Fast forward to 2007 and we see another major offline-to-online transition taking place, but this time the intellectual asset is not the MLS, but market knowledge — that hyperlocal stuff that fills Realtor’s brains, and, increasingly, real estate blogs. Realtors by the hundreds of thousands around the country know what the good local schools are, where new construction projects are taking place, how to price a home for sale…

Again, we have two types of players competing to monetize this asset online: “outsiders” like Curbed.com and Socketsite.com, and industry players, which this time around is largely individual, and often maverick, single agents, rather than brokerages or franchises. Their weapon? Blogging.

Given that the potential Move.com acquisition of ActiveRain is, uh, not going very well, the largest fundraising to date in the real estate blogging world is almost certainly Curbed’s $1.5M, which gave Curbed a post-money valuation of — wild guess here — $6M to $12M.

What in the world is Curbed going to do with $1.5M, and how in the world does it get such a large valuation? Let me speculate:

A site’s value, even in today’s arguably-bubbled tech economy, is usually related to its potential for advertising revenue. If Curbed can become the de-facto source of local and real estate news for Gen X -and-Y’ers, it has a huge potential audience. But there may be an even bigger pot of gold at the end of the rainbow: referrals. Given that this business is, for most agents, a constant struggle to get more leads, referrals — especially quality ones — are extremely valuable. If the Web 1.0 companies could get rich slinging leads at 35%, why not Curbed?

With the $1.5M, Curbed is going to hire more writers, beef up its site, open up in a few more cities…and probably hire more sales folks. And yes, some of these sales folks may well be calling your phone soon, selling you not only advertising…but also leads.

———————-

Below I’ve presented the same thoughts, first in powerpoint form, then in a rough-and-ready video form. Haven’t yet mastered Camtasia Studio and the art of video-casting.

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My favorite online news source, The New York Times, ran a story today “Dubious Fees Hit Borrowers in Foreclosures” in which the writers interviewed Katherine M. Porter, associate professor of law at the University of Iowa. In a review of many loans that are now going into foreclosure, Porter found that questionable practices among lenders are leading some experts to contend that lenders are taking advantage of higher-risk borrowers and those facing foreclosure.

“Because there is little oversight of foreclosure practices and the fees that are charged, bankruptcy specialists fear that some consumers may be losing their homes unnecessarily or that mortgage servicers, who collect loan payments, are profiting from foreclosures.

Bankruptcy specialists say lenders and loan servicers often do not comply with even the most basic legal requirements, like correctly computing the amount a borrower owes on a foreclosed loan or providing proof of holding the mortgage note in question.

“Regulators need to look beyond their current, myopic focus on loan origination and consider how servicers’ calculation and collection practices leave families vulnerable to foreclosure,” said Katherine M. Porter, associate professor of law at the University of Iowa.”

You may be asking what this means to you in Palo Alto, happily making your payments on your $1+ million mortgage on your $2.4 million median priced home (no, that isn’t a typo!). As Mortgage Manics have heard me say before (OK, read), national lenders use a mostly one-size-fits-all approach to lending, meaning that practices and guidelines that are developed and applied to home buyers in Iowa, Tennessee and Colorado are also applied to us here in Silicon Valley. As a result, if you are reading about unscrupulous practices and excessive fees by national lenders that are being exposed in areas with high foreclosure rates, you may want to check the fine print on your mortgage and see what you are paying for in addtion to PITI.

In addtion, Porter found that lenders didn’t provide accurate payoff amounts for their loans to consumers, with one claiming they were owed $1,000,000 when the actual payoff amount was $60,000. That must be that fuzzy math stuff . . .

Countrywide was recently sanctioned by a court in Pittsburgh for losing or destroying over $500,000 in checks between December 2005 and April 2007 for homes in foreclosure. These are the companies holding the title to our homes, so we need to keep an eye on them.

You can read the full text of the article here.

On that happy note, have a great week, and thanks for reading.

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Finding myself with some free time at the end of a relaxing weekend, I thought I’d goof off on Facebook for a while.  Being a geography buff, the Traveler IQ program has captured my interest of late.

I created a geography quiz for all of you re.net buffs out there.  Alas, I couldn’t figure out how to embed it here, so you’ll have to head yonder to Facebook and play the game at the original source.  (Facebook account required.)

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