Stale Tuna And Resetting The “Days On Market” — Chicanery And A Public Health Risk, Or Just Plain Old Good Salesmanship?
January 31, 2008
Alex over at theFrontSteps has a lively debate going on about the ethics of “DOM trickery.” (For non-industry folks, “DOM” means “Days on Market” and it refers to how long a property has been on the MLS.) Is it duplicitous or just good marketing to reset the DOM number — often just by classifying the listing as “withdrawn” and then re-entering it minutes later — to make a property look fresher than it is?
I look at resetting the DOM figure as akin to a grocer scratching out the sell-by date on a can of tuna and replacing it with a later date: it smells funny.
Our local MLS has a very clear policy on DOM resets: if an agent takes the property off the market, it has to stay off the market for a full month and the seller needs to sign a new listing contract. Then, and only then, will the clock reset.
Seems like a reasonable policy to me. Back to the tuna example — if the grocer were to take the tuna to a lab, open up the can, test it for all the bad stuff, and, if it cleared muster, re-package it with a new sell-by date — fine!
As the commenters in Alex’s article note, a with-it buyer’s agent will know what the real DOM number is. “8 days on market for 123 Main Street? You’ve got to be kidding me! Joe Smith had that overpriced dog on the market for nearly 9 months. Now he’s changed the carpeting, increased the price, redone the brochures…and voila — he calls it a new listing!”
Tags: Consumer, Industry, MLS
January 30, 2008
Let’s see … on January 20th, the Fed Funds rate was 4.25%.
On January 21st, the Fed dropped the rate to 3.5%.
Today, January 30th, the Fed dropped the rate to 3.0%.
So, in 10 days (January 20th to January 30th) the rate dropped by 1.25%, which means [click click click on my calculator] we’re seeing a 0.125% per day drop.
At that rate, we’ll be at [click click click] 0% by February 23rd!
Hey, there, you ex-engineer, what do you think of my extrapolation skills?
Tags: Consumer, Fed, Humor, Industry, interest rates
January 30, 2008
And sho’ ’nuff…I see nary a leaf on a tree outside my window, but statistical and anecdotal signs of market activity picking up are legion.
Charts from our friends the statistical geniuses at Altos research show the traditional early year inventory bounce happening in Palo Alto — Swiss-clock-like in regularity:
- An escrow rep friend of mine says her order book is fuller than it’s been in six months.
- The manager of a mid-size local brokerage says his agents have been going on listing appointments, getting new listings, and writing offers at a much faster clip than in the last few months.
- At least one transaction in Palo Alto last week sold with multiple offers and sold for a substantial amount more than the list price.
Friend, fellow 3 oceans contributor, and Realtor Chris Iverson of The Ventoux Group says:
Listings are starting to increase, but slowly in Palo Alto. Mountain View and Los Altos seem to be off to a slower start this year than last as well.
I am seeing more activity from Buyer prospects since the beginning of the year, but a lot of them have gone back to a “wait and see” attitude following news of the potential increase in the conforming loan limit. That will have a significant effect for first-time buyers in areas like Mountain View and Sunnyvale, where $729,000 gets you a decent townhouse, or a house in Sunnyvale.
Jeff Klein at Absolute thinks it will take about 6 months from the conforming limit change for the resulting loans to be available to buyers, and for the impact on the market to be felt.
Colleen Foraker, of Alain Pinel Realtors in Palo Alto, says:
“We in the industry need to do a better job of educating sellers that this is actually a great time to sell. Inventory is at a 10-year low, and we’d love more listings. Problem is, sellers are reading the media, hearing that the market is up to no good, and deciding to wait it out.”
This past week was brutal! Last Saturday & Sunday we had the most traffic ever to come through our open houses. However, on Monday (MLK Day) foreign stock markets crashed. On Tuesday the Fed dropped the Prime Rate by ¾ of a point. And by Wednesday, according to several agents, local buyers were retracting their offers to purchase homes. Then, at the end of the week, Congress came up with a plan to restore confidence and stability in the market.
We continue to get calls from prospective home buyers who believe that it has become a “buyer’s market” in our area … The bottom line: demand for homes exceeds supply in this market place. It was reported this week in the SF Chronicle that in 2007 the Bay Area added 54, 000 jobs. It’s expected, they said, that at least 15,000 jobs will be added in 2008. While the housing market nationally and in the wider region of the Bay Area may be the slowest since the Great Depression, the housing market from Menlo Park through Los Altos is very strong; homes sell quickly, often with multiple offers.
Tags: Altos Research, Buyers, Consumer, Industry, Palo Alto, Sellers
January 29, 2008
I’ve accused David “Hi this is David G from Zillow” Gibbons of having a technorati-enabled chip embedded in his ear that buzzes whenever anybody, anywhere on the Internet mentions his employer. Rumors have been circulating that Greg Swann may have a similar device, which sends out the bat-signal any time one of numerous companies — especially Redfin — is mentioned.
It appears the bat-signal just rang, this time initiated by an article in Forbes about Redfin. The title alone — Swimming With Sharks — immediately reveals the author’s slant, and Greg properly and roundly chews him out. The good guys — in this genre, it’s Redfin, always Redfin — “say” and “write” when communicating, and the bad guys — traditional brokers, in this case exemplified by Gary Bulanti of Alain Pinel Realtors, my ex-broker — “sniff,” as in:
“In our area the consumer is savvy enough to know that they want value and a high-quality agent,” sniffs Gary Bulanti, a Realtor with Alain Pinel Realtors in Menlo Park, Calif.
(I should note that Gary Bulanti does not sniff when he talks. Au contraire, his nasal passages are actually quite clear, thank you very much.)
So, yes, I will agree with Greg that the mainstream media has — once again — done unbiased journalism a dis-service.
But let’s overlook that for a moment — if we can — and think about this: Shouldn’t we be far more outraged at the dirty broker tricks being done against Redfin?
If the traditional industry believes Redfin’s days are numbered, why not let the market take its course? Why resort to middle school-style behavior such as:
- Not presenting offers
- Bad-mouthing Redfin
- Destroying Redfin signs
Bribinglobbying state legislatures to outlaw rebates
If these things are actually going on — and I see no reason to believe Redfin CEO Glenn Kelman is “just making this stuff up” — we should be apoplectic! These incidents give the industry a worse name than it already has — a pretty difficult thing to do — and provide the media and Redfin with more ammo.
I personally have not seen first-hand these kinds of things directed at Redfin, but I have seen enough shenanigans in this business to have no doubt that they are actually occurring.
Not presenting offers? Come on! That is such a clear violation of ethics, fiduciary duty, common sense, fairness, sanity…and I can completely believe it happens.
Finally, Glenn, if you’re reading this, I hope you were misquoted when you said: [bold italics mine]
“Every week we have a selling agent tell one of our clients that their offer will go nowhere,” Kelman says. “They say, ‘We control the inventory, and you will never get this house.’”
A listing agent represents the seller. A selling agent represents the buyer. I know, it’s kind of silly, but that’s the way it is.
Tags: Consumer, Glenn Kelman, Industry, Redfin
January 29, 2008
The boys at Sellsius keep on finding these tasty treats. Their latest one? A pictorial comparing how the same home appears to different people.
Hint: To your appraiser, it looks like a junker. To the county tax assessor, your name is Oprah Winfrey.
Head on over there and check it out…
Tags: Consumer, Humor, Industry
January 28, 2008
Insomniac Dustin Luther couldn’t quite stay up late enough last night to witness the launch of the US version of Dothomes.com. But here it is, yet another real estate search site: dothomes.com, already live in South Africa and the UK.
I commented yesterday that recent property search entrant Roost.com’s business model is clever, unique, and possibly
illegal non-MLS-complaint. [1/30/08 update: I’ve been thinking about my choice of words, and “illegal” is definitely not the word I should have used. “Illegal” is mugging somebody, or stealing something. What Roost is doing is 100% legal and above-board. It may — and I emphasize may — be viewed by some as being non-MLS-compliant.]
A first glance at Dothomes suggests a similar, though unfortunately more damning verdict: extremely clever, very unique, and definitely
illegal non-MLS complaint. [1/30/08 update: What Dothomes is doing is absolutely 100% legal, but again may be interpreted by some as being non-MLS compliant.]
The clever and unique part is easy to see: they’ve managed to pull off what Google Base real estate could have been, and may well still become: a Google-ish type search experience — with a whimsical “I’m feeling wealthy” instead of “I’m feeling lucky” button — where instead of choosing your criteria from input boxes or sliders, you simply type in what you’re looking for.
Right-oh then, let’s give it a try, shall we?
And, as the Brits would say, “Bob’s your uncle!”
A quick glance at the 99 results confirmed that they all had 3 bedrooms and were under $850K. Pretty slick! (As a sidenote, many of the results were in South San Francisco, an entirely different city. But I’ll cut them some slack on what is, after all, a pretty new product.)
So that’s the clever and unique part. Here’s the (tragically)
illegal non-compliant part: per their own FAQ/blog, they get their data from either a feed that a broker sets up or by crawling the broker’s site.
From a feed the broker sets up: So far, so good…as long as it’s only that broker’s listings.
By crawling that broker’s site: At most MLS’s this is strictly verboten.
Most of the first few pages contained only listings from Realogy brands Coldwell Banker and Century 21. Since Realogy has been fairly open of late with distributing their inventory online — e.g. with Trulia — it is possible that Dothomes has an agreement with Realogy, though I have not heard such news.
A few pages later I see a few listings from my ex-Broker Alain Pinel Realtors. Now the warning bells sound. Unless things have changed dramatically since I left a few months ago, Alain Pinel would never ever distribute its listings to a non-IDX site — Trulia being the exception (probably because Sami is such a sweet talker!)
My prediction: tragically, Dothomes will be forced fairly quickly to adopt an alternate and legal listings acquisition strategy: either MLS-by-MLS, or broker-by-broker.
- Future of Real Estate Marketing weighs in.
- Mashable wonders if Dothomes will be able to compete against Trulia et. al.
- SearchEngineLand notes that in real estate search, just like travel search, there is no one comprehensive site with all listings. (Realtor.com could lay claim to the title of “most listings” by virtue of having most broker-listed homes, but it does not include FSBO’s…plus the site just, well…sucks)
Todd Carpenter, in what I believe is a quote from Dothomes founder Douglas De Jager, says:
Because DotHomes does not serve up those details pages, they do not need permission from the listing agents.
I hope this isn’t Dothomes’ understanding of what most American MLS’s allow, because if it is, he’s in for a nasty surprise.
Tags: Alternative business models, Century 21, Coldwell Banker, Industry, MLS, Realogy
Roost Levels The Playing Field Between Listing And Buy-side Brokers, But (Speaking From Personal Experience!) How Long Before An MLS Strangles It?
January 27, 2008
Roost, a new startup in the increasingly crowded real estate search space, launched last week to a cacophony of commentary from the re.net. Joel Burslem covered its feature set, its performance, and noted that Roost has the complete MLS inventory because it gets its listings from MLS’s, albeit indirectly. Greg Swann fawned over its business model and complete inventory.
If I understand Roost’s business model correctly, it intends to make money in a way that’s clever, unique, and possibly
illegal non-MLS-compliant. [1/30/08 update: I've been thinking about my choice of words, and "illegal" is definitely not the word I should have used. "Illegal" is mugging somebody, or stealing something. What Roost is doing is 100% legal and above-board. It may -- and I emphasize may -- be viewed by some as being non-MLS-compliant.]
The unique aspect of its business plan: it offers brokerages the opportunity to sponsor search results and get the resulting click-throughs to their own site. A search in Sacramento, for instance, reveals that the current sponsor is Sacramento heavyweight Lyon Real Estate.
The first three listings I see are from VM Group, Gold Financial Services, and Prudential CA Realty, all clearly identified in compliance with Sacramento’s Metrolist MLS services.
Here’s the tricky bit…if you want more information, you click on “View Details on Featured Broker’s Site.” When you do that for, say, the Prudential listing, you get information about the Prudential listing on the Lyon Real Estate site:
This sleight-of-hand is accomplished through a too-clever-by-half url manipulation, much to subtle to be noticed by the average consumer, but apparently kosher enough to pass muster from the Sacramento MLS — at least for now. What if Prudential gets upset that the click-through on one of their listings on a public MLS-ish site goes through to one of its competitors?
Here’s how (I believe) Roost and Lyon defend themselves: Look at the url. When you search in Sacramento, you’re not actually using the Roost site at all; you’re actually using the Lyon site (GoLyon.com). For as long as Lyon is the sponsoring broker, the search is being conducted at golyon.roost.com — a (sub)domain under the control of Lyon Real Estate — and hence in compliance with those silly old arcane MLS rules.
Watch what happens when you go back to the site. In my case, I ran another search, and this one was sponsored by Intero. Same results, same look and feel, but the search is now running at InteroRealEstateIDX.com…and sure enough, the click-through goes to Intero’s own site.
Very, very clever. I really like this part of their business model, for reasons I’ve explained before: The current real estate business model heavily favors the listing side of the equation, and I’ve been clamoring to the likes of Zillow and Trulia to think about buy-side advertising offerings. If I’m a small brokerage in Sacramento, and I currently only have, say, 5 listings, I could decide to spend, say, $5000 sponsoring X number of real estate searches in that market. The number one bait that still seems to draw eyeballs in real estate is listings, listings, listings, and if I don’t have many of my own, why not leverage those of my competitors?
Now for the questions of MLS
legality compliance …without going into all the details, I tried something like this trick about 2 years ago. It involved subtle manipulation of a url so that searches on a heavily-trafficked site were done — technically — using a url that was under my control. A good lawyer could easily have argued that this was in strict compliance with all the MLS rules. No dice. Within hours I got slapped down — not just by the MLS, but by my own broker!
I certainly wish Roost all the best, but I’m afraid they’d better put a sign on their front door that says, “Couriers please deliver cease and desist letters here.” Any business model that requires MLS compliance involves by definition an order of magnitude more headache. Why do you think Trulia and Zillow decided to get their listing feeds straight from the brokers?
- TechCrunch, predictably, gets a few facts wrong. It’s not clear they understand the difference between a broker (e.g. Redfin) and a listings site (e.g. Roost.) Also, if I understand this bit of fine print on Roost’s site, they don’t get their data directly from the MLS, but by piggybacking on broker IDX sites. Subtle but important difference.
- Dustin notes that piggybacking off IDX feeds is a great way to scale your listings database quickly, but it puts some pretty onerous restrictions on what you can do with the data.
- Michael Price explains the url sleight-of-hand.
- Jay Thompson notes that, once again, the business model is about brokers providing listings, then paying for traffic.
- Sellsius praises Roost’s comprehensive and accurate results.
And still more commentary:
- Brian Boero* notes the irony that Roost is built on fairly antiquated technology — IDX — but provides a pretty rich user experience.
* At the last Inman, Brian and I finally answered that great conundrum: Did his ancestors add on “o” or did mine drop an “o” at Ellis Island? The answer: neither. His ancestors are Italian, and mine Dutch. So no, we’re not related — except of course, through Lucy.
Tags: Alternative business models, Industry, MLS, Real estate, Roost, Trulia, Zillow
January 24, 2008
Warning: This post is light, frivolous, low on calories, lean in content, and has absolutely nothing to do with real estate.
Arizona has its share of richly-monikered (or at least richly-nicknamed) real estate bloggers. We have, for instance, the Jesuit Libertarian Bloodhound (I have to believe I’m not the only one who refers to Greg Swann thusly). Then there’s Shailesh Ghimire, an Arizona-based mortgage broker, upon whom I hereby bestow the moniker Shailesh “Fried-Momo” Ghimire.
Every few months one of these silly little memes circulates around the re.net, and this time I’ve been tagged by Shailesh. The rules are: list 7 things about yourself, then tag 7 people. Pretty straightforward. Here we go:
- Shailesh may be the first Nepalese mortgage broker I’ve ever come across, but I’m probably the first triple-citizen real estate broker he’s ever met. Through a confluence of differing citizenship laws, timing, and restless parents, I and my two younger siblings inherited American, Canadian, and Dutch citizenships — and we have the passports to prove it.
- I speak only about 50 words of Dutch, and 45 of them are rude.
- I know two African languages well enough to say the following tongue-twister:
Setswana (spoken in southern Africa) — “Go goga ga gago ga go gontle.”
Translation: “Your smoking is not beautiful.”
Hausa (spoken in northern Nigeria and environs) — “Ba ta taba tabata ba, ko ta taba taba taba, ko ba ta taba taba taba ba.”
Translation: She has never said for sure whether she’s ever touched a cigarette.”
Both eminently useful phrases at United Nations cocktail parties where the conversation centers around carcinogenic habits.
- I spent part of Christmas morning 1995 flying over Mosi-oa-Tunya in a microlight.
- Said waterfall being near the confluence of four countries — Botswana, Namibia, Zimbabwe, and Zambia — I spent the rest of Christmas morning 1995 navigating 5 international border crossings: Botswana to Zimbabwe to Zambia back to Zimbabwe back to Botswana and then over to Namibia. Why? Because then I could write about it 12 years later.
- I have no idea if I like fried mo-mo’s. I do, however, like kosai and magwinya — neither of which are blessed with Wikipedia entries. The latter are lovingly referred to in English as “Fat cakes” and that pretty much describes them: kind of like donuts, only they have more sugar and are even more greasy.
- For reasons that only people who have ever lived within 200 miles of here will understand, I have never had the courage to try this (no doubt wholesome and delicious) food.
I believe I need to tag 7 people. I’ll build up to it over the next few days, but for now I’ll tag Arn Cenedella, a Realtor with Coldwell Banker in Menlo Park.
No tag for this post.
Relief Ahead For Troubled Areas of the Housing Market? If This Law Passes, Your $750K Home Could Cost You $500 Less Per Month
January 24, 2008
Several changes are afoot that may give some breathing room to the troubled parts of the housing market — which includes much of the country, even some areas here in the Peninsula. The Fed’s surprise 75-basis point rate drop a few days ago may lead to lower mortgage rates, and some of those with soon-to-reset adjustable rate mortgages may also be breathing easier.
The news today is that the House of Representatives has signed off on at least a temporary increase in the conforming loan limit, from its current level of $417,000 (more than enough for much of the country, almost irrelevant here) to $625,000, and perhaps as high as $700,000 in high-cost states. Now if the Senate and W. sign off on it, we could have ourselves a deal!
Currently, conforming loans (those which are guaranteed and resold by Fannie Mae and Freddie Mac) are limited to $417,000 in most states, but are about 50% higher in “high-cost” states like Hawaii and Alaska. By some twisted government logic, California is not included as a “high-cost” state.
What impact would raising the limit from $417,000 to $625,000 have on our local market? As a non-mortgage professional, here’s my take on it… (I’m hoping that a local mortgage expert or two may chime in here.)
First, if you’re buying a $1.5M home and putting $300K down — ie you’re borrowing $1.2M — nothing would change for you. Since you’re borrowing more than the limit, your loan can’t and won’t be resold and guaranteed by Fannie and Freddie, and the risk premium for this has increased dramatically over the last year. A quick check over at bankrate.com shows a full 1.16% price difference between a conforming 30-year mortgage at 5.25% and a jumbo 30-year mortgage at 6.41%. Sorry, you’re stuck in the 6.41% camp.
However, if you’re buying a less expensive home — or putting down a lot more money — this could help dramatically. Say you’re buying a $750,000 home and you’re planning on putting $125,000 down — ie you’re getting a $625,000 loan.
Currently, that’s above the conforming loan limit, so with today’s rates you’d be paying (click click click on my calculator) $3914 per month. If the bill passes, you could get that same $625,000 loan for for 5.25% (click click click) or $3451 per month. That’s a handy pre-tax savings of a tad over $500/month, hardly chump change.
The lesson? If this bill passes, and the numbers work out such that the home you’ve been eying would require a loan between $417,000 and $625,000, here’s what you need to do:
- Scramble, beg, borrow, steal — do whatever you need to do in order to get enough of a downpayment to bring your loan in under $625,000.
- Work with your mortgage person to get a big enough second mortgage so that your first comes in under $625,000
- Brian Brady notes that some political horse-trading may be ongoing as part of the negotiations. In particular, President Bush may have dropped his insistence on increases in loan limits being tied greater regulatory oversight.
- The Front Steps blog posits that this will cause a rush of demand for appropriately priced properties in San Francisco, leading to a good year for real estate.
- A commenter at Socketsite notes the downside of this move: Hooray! Privatize profits, then socialize the losses…Now all the troubled lenders can refinance this toxic garbage and put it into Fannie/Freddie’s lap (oh, and FHA too.)…I’m saving my $300 tax rebate (that I don’t qualify for) so that I can pay my share of the bailout.
The OFHEO (government body charged with oversight of Fannie Mae and Freddie Mac) released a hefty 19-page position paper earlier this month with some fascinating statistics. Of particular note:
Nearly 50% — half — of all jumbo loans come from California.
Secondly, this graph, from the same OFHEO report, clearly shows the havoc the whole mortgage fiasco has caused to the Jumbo loan market: the difference in interest rates between conforming and Jumbo loans more than quadrupled in 2007. Here’s how to read this graph: In January 2007, the interest rate difference between conforming and Jumbo loans was a scant 20 basis points; a confirming loan product at, say 6%, would have a comparable Jumbo product at 6.2%; by the end of 2007, that difference had increased to 80 basis points, so a conforming product at 6% would have a corresponding Jumbo product at 6.8%.
That’s real money, folks!
Caveat: I am not a mortgage broker or banker. In particular, I am not your mortgage broker or banker. The above represents my layman’s understanding of the issue. Don’t make any kind of home purchasing decision based solely on the above. Talk to your mortgage professional. ‘Nuff said.
Tags: Conforming Loans, Consumer, Fannie Mae, Freddie Mac, Mortgages, Real estate
January 23, 2008
Fellow 3 Oceans contributor and South Bay Keller Williams Realtor Bart Marchioni forwarded me a rather entertaining newsletter from National Building Inspectors. “Entertaining” and “Building Inspectors” aren’t normally found together…but — perhaps due to my macabre sense of humor — I couldn’t help laughing at this imagery…
Imagine a colony of termites infesting your home
Here’s what it might look like:
Ok, actually, the orange substance isn’t orange juice, but rather orange oil, or Limolene, a “terpene hydrocarbon colorless liquid with an extremely strong smell of oranges.”
And NBI is a reputable firm, so no, they wouldn’t recommend dousing your home with OJ in hopes of killing your termite housemates.
According to the NBI newsletter, they’ve been asked by many people about whether orange oil is effective at killing termites. A summary of their opinion:
- Yes, termites will be killed on contact by orange oil. (Of course, they would also be killed on contact with my foot!) Getting termites to come in contact with said orange oil, however, would be nigh impossible in the hidden wooden structures of the home — ie. in the vast majority of where you would find termites. A handy little diagram from NBI:
- Yes, orange oil will “defy gravity” — ie soak in all directions, including upwards — but, for that matter, so does water. The key problem is that orange oil apparently biodegrades after only 4 days.
The personal opinion of the newsletter’s author is that NBI “would never certify a home as being ‘free and clear’ of a drywood infestation that was treated with orange oil.”
Disclaimer: I am not a termite inspector. More importantly, I am not your termite inspector. If you have termite issues, or questions about termites, please ask your friendly professional termite inspector. Above all, do not pour orange juice over your home in an attempt to kill your termite housemates. ‘Nuff said.
Tags: Buyer and seller tips, Buyers, Home Inspections, Limolene, NBI, Orange oil, Sellers, Termite Inspections, Termites
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