Watch Out Zillow…Here Comes…PatZillow

June 16, 2007

Patrick of Patrick.net, one of the leading luminaries of the real estate Armageddon school of thought, recently launched a “real estate dating service.” In a clever twist, and to (at least try to) prevent pesky real estate agents from using the service to do a “bait-and-switch” to land clients, his service initially charged sellers $10 per match-up, of which $5 went to the buyer in question.

The idea is that a buyer will register and indicate that he’s looking for, say, a 3/2 in zip code 94025 for $1.2M, and is willing to put 20% down. If I’m a seller with a similar property for sale, I pay $10 for the introduction to the buyer, $5 of which goes to the buyer.

Here’s the issue, however…with Patrick.net being so decidedly bearish on real estate, why would any seller expect to meet anybody other than bottom-feeding buyers who’ve been on the troll for that “30% under market value property” since the waning years of the Clinton presidency?

The FAQ handily addresses that issue:

Didn’t you say “it’s a terrible time to buy”?

Yes, it is a terrible time to buy. Don’t do it - unless you can get a great price, way below the cost of renting.

Earth calling Bay Area home buyers…it’s been probably a decade since there were homes available in this market where the total cost of ownership was less than renting. It’s just not the way it is right now in this market!

Two days ago, Patrick announced that the $10-from-seller-and-$5-to-buyer scheme — which is definitely a creative touch — wasn’t working, largely because sellers were suspicious that buyers who were being paid $5 to talk might not have been serious. So, he cut the fees altogether and may make the service advertising-supported.

My advice to Patrick? This idea may well have legs, but how about tweaking the incentives. Charge the sellers $5 for an introduction, but don’t pay the buyers for participating. The prospect of finding an off-MLS opportunity should be reward enough for buyers to play along.

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Written by Kevin · Filed Under Bubblistas, Patrick, Real estate | 1 Comment 

Thank You Ben, Patrick, and Keith, uber-Bubblistsas, For Helping My Clients Tremendously

March 14, 2007

Ben, Patrick, and Keith — authors of this, this, and this housing bubble blog, respectively — have been valiantly — and successfully — helping people avoid the inevitable financial doom of homeownership since about 1998. (For your convenience, I’ve marked that year with a nice big red star in the below graph of average housing prices in Palo Alto, CA.) In exchange for that valuable public service, they have collectively made — I’m just guessing here — a few dozen to a few hundred dollars in advertising on their sites.

Bubblistas began predicting the imminent demise of the housing market in about 1998

Other bloggers — most notoriously and successfully, the boys from Bloodhound — have taken these bubblistas to task. Greg Swann, for instance, has called Keith an “idiot” — and that was one of the more flattering phrases he used. A fairly entertaining, but somewhat unproductive, flame war developed when Greg made insinuations about what sort of pleasure Keith as the poster-child of bubblistas might take in constantly dreaming about the impending housing crash.
I, however, have a different take. I am truly grateful to these far-sighted pundits, for without their insight, many thousands more would have bought properties here in Silicon Valley over the last decade, pushing prices even further up, and making it more difficult for my buy-side clients to get into the market.

Being a math-ey type of person, I ran a series of Monte Carlo simulation multi-inverse-hyperbolic-regression models* to estimate what housing prices would have been in Palo Alto without the influence of Ben, Keith, and Patrick. Here are my results:

What would have happened to home prices in Palo Alto if not for the influence of the bubblistas

Gentlemen, on behalf of my buyer clients, thank you.

* Footnote — Actually, I pulled the projected numbers out of thin air. In consulting, we would have cited the “WAGNER Institute.”

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Written by Kevin · Filed Under Ben, Bubblistas, Consumer, Industry, Keith, Patrick, Real estate | 15 Comments