Trulia Bests Zillow and More
September 29, 2006 | 1 Comment
Web 2.0 real estate site Trulia landed at #1 in a poll of Business Week readers when asked about thier favorite real estate related sites, according to a post on their blog. I find it interesting that they bested Web 2.0 powerhouse, Zillow. I also thought it was interesting that Curbed.com made the list, since it is a blog, and very different from any of the other sites.
MLS Not Picking Up What the FTC Puts Down
September 29, 2006 | 1 Comment
As the saying goes, "those who ignore history are doomed to repeat it." Apparently, the people in charge of Realcomp II, Ltd., the largest MLS system in Michigan, can be pretty ignorant, or at least obstinate. According to an article from Inman News (subscription required), the Federal Trade Commission has expressed its displeasure with Realcomp II’s policy of not allowing Exclusive Agency listings to be displayed on its sites that are viewable by the public. Exclusive Agency is a type of listing that allows the seller to find a buyer without utilizing or paying a commission to the listing broker. By restricting the display of Exclusive Agency listings, those listings cannot appear on Realtor.com, any Realcomp II public MLS search site, or in the IDX data that is displayed on the websites of its members. The FTC has previously approached other MLS systems about the same type of policy, and they complied with the FTC’s request to change the policy. The most recent MLS to face a formal complaint was in Austin, TX.
It would appear that Realcomp II is going to test their luck against the FTC, since they formally rejected the FTC’s settlement proposal. According to the Inman article, Realcomp says that it will use its errors and omissions insurance to assist with legal costs that it would incur from fighting any lawsuit by the FTC. I wonder if they ran that by the E&O provider yet? I can’t imagine that their E&O provider is exactly thrilled about the prospect of footing the bill for the defense of a lawsuit by a Federal agency. . .
Realcomp’s reason for rejecting the FTC proposal is summed up in the statement they released:
"We have an obligation, first and foremost, to our REALTOR® customers,"
said Karen Kage, CEO, Realcomp II Ltd. "The purpose of our MLS is to
facilitate the sale of properties between listing and selling agents and, in
turn, ensure compensation for both parties. To change our rules and
organizational structure, established by our Board of Governors and agreed to
by our broker members, would entirely compromise the purpose of the MLS and
the core service we provide to our REALTOR® participants who pay us to
represent their best interests."
Kage continues:
"The changes to the rules demanded by the FTC could result in
the sale of properties between buyers and sellers with no obligation to
utilize or compensate broker members, which is completely outside the purpose
of the Multiple Listing Service. The FTC complaint makes absolutely no sense
and we reject any proposal that would result in such a scenario."
I’m not positive about this, but I don’t think that telling the FTC that they make "absolutely no sense" is the most tactful way to respond to their proposal, especially since the FTC convinced 4 other MLS’s that it was making pretty good sense.
Both of these quotes serve to solidify my opinion about MLS systems in general, although that isn’t what I want to focus on right now. What bothers me about this situation is that the listings that are being restricted are listings being entered into by owners and REALTORS. The problem that the FTC seems to have with these policies is that the MLS is restricting the display of perfectly legal listings that are created by its very own members. To the FTC, it doesn’t seem fair for an MLS to restrict the public display of perfectly legal listings of its very own members. It is true that Realcomp II is not forbidding the listing of Exclusive Agency agreements, merely the display of such listings to the public. I do not, however, agree with their assertion that, in so doing, they are representing the best interests of their REALTOR participants. The interests that are being represented are those of the REALTOR participants who do not sign Exclusive Agency agreements. The REALTOR participants who do sign them are left out in the cold.
It is true that there is the possibility that displaying such listings to the public could result in a transaction in which neither buyer or seller utilizes a REALTOR; but what about the buyers out there that DO want, or already have, representation through a REALTOR? Why shouldn’t they be allowed to view the properties?
The following paragraph from the Realcomp II statement made me chuckle:
"Moreover, a recent survey performed by the National Association of
REALTORS® showed that consumers benefit financially when they employ a
licensed real estate broker," said Kage. "Such individuals can make up to 16%
more on the sale of their homes than ‘For Sale by Owner’ properties."
Additionally, through the survey, two-thirds of ‘For Sale by Owners’ indicated
they would use a REALTOR® the next time.
I find it funny because the FTC doesn’t care if people make more money by using a REALTOR. The FTC isn’t there to protect the possibility of a consumer making more money by making one choice as opposed to another, the FTC is there to protect the consumer’s ability to choose. Sites like Zillow and Redfin exist based on this fact. The FTC is concerned with preserving competition and choice, not preventing stupidity. I would hope that Realcomp II’s lawyers wouldn’t cite the results of an NAR survey as a legitimate defense of the policy.
It would seem that Realcomp II is willing to ignore the history of MLS companies that have tried to buck the FTC. We all know what happens to people who choose to ignore history. In this case, the price of ignorance could be a high one, literally. If Realcomp II thinks that the reward of keeping the policy is worth the risk of going "tete a tete" with the FTC, more power to ‘em. That’s what the legal system is for.
Clash of the Titans
September 26, 2006 | Leave a Comment
The gloves are wrapped, the head gear is strapped on tight, and the Sellsius 101 Blog Post Challenge is well underway. The warriors in this battle are Greg Swann of the BloodhoundBlog, and Ardell DellaLoggia of the SearchingSeattle Blog. Each of them is making an insane attempt at posting 101 real-estate related posts on each of their blogs in a 24-hour period. In the event that both of them collapse from exhaustion before making the 101 blog posts, I guess the winner will be the last blogger standing. 
I figure that if each of those posts averages 5 minutes in creation time, then each of them is going to have to devote AT LEAST 8 1/2 hours to typing. That is crazy!
I haven’t been near my computer for most of the day, but when I did get there, my RSS feed reader was smoking. They are each doing a fantastic job, and I am sure that there will be much post-challenge analysis tomorrow.
As of right now, I see that each blogger has a Charlottesville Area streak. Greg wrote a very thoughtful review of yours truly, and Ardell included Monticello in her photo posts of notable homes.
The action thus far has been great, and I can’t wait to see what the evening holds. . .
Zillow VP/CFO Runs Smack Into the “Unzillowables”
September 25, 2006 | 2 Comments
This post recently came across my RSS reader. It is from the Zillow Blog, and written by Zillow’s VP of Marketing and Chief Financial Officer, Spencer Rascoff. The post tells us of Rascoff’s journey through 3 open houses in his area, all of which were homes found on Zillow. He doesn’t give us the data for the first two homes, other than to say that, "the Zesitmates were very close to the asking prices." He, instead, focuses on the story of the third house. It is at this home that he runs smack into some "unzillowables" According to Rascoff:
As soon as I walked in, I was taken aback by the stench. There was
no furniture, the carpets were stained and the house reeked. I quickly
figured out why this house was asking $710,000 when most houses in the neighborhood sell for $1M+.Anyway, the Realtor noticed me grimacing and then filled me in.
Apparently the homeowner is an elderly man who several months ago moved
into a nursing home. When the owner’s family hired this agent to sell
the house, the agent discovered a squatter had apparently broken into
the house and had been living there for several months. I should add
that my house is right around the corner and shares a fence with this
house. Also, several months ago my wife told me she saw a man hop the
fence and go into their backyard. I told her she was crazy and ignored
the event. (When will I learn?!) Anyway, the man — the squatter –
bolted when the agent entered the house that day. Several months and
many cans of aerosol later, the house is now on the market.
Talk about unzillowables! I’m pretty sure that the subject property’s Zestimate doesn’t mention any squatters. After viewing the home in person, Rascoff draws the following conclusion:
I will say this for the house: for someone with a limited sense of
smell and an appetite for a big-time remodel, it’s a bargain at $700K.
The house next door (which is in great condition) just sold for $1.4M, so I think this one could be fixed up for less than the $700K difference.
Out of sheer interest, I clicked on the "map comparable homes" link for the smelly subject property in question. Check out what I found. The homes that are comparable to the subject property, according to Zillow, are valued between $499K and $825K, with the average being around $690K. It would seem to me that the subject property isn’t such a deal at $710K. Why isn’t it such a deal? Because of the unzillowables! $710K seems fair when set against the comparable properties, but did those comparable properties also have issues with their overall condition, not to mention lack of security? The Zestimate for the subject property is $720,432. According to what Zillow’s own visual inspection of the property yielded, the sales price probably won’t be anywhere near that figure. That, my friends, is a quintessential example of the role that unzillowables play. Although, the owner is now free to log into Zillow and add the fact that the house has been shelter for a squatter for months. I wonder how that will affect the Zestimate?
And as far as Rascoff’s opinion that the home is a deal because of the sales price on the house next door, that house has over two times the square footage, 2 more bedrooms, and 1.75 more baths than the subject property. On top of that, Rascoff tells us that the house next door is in great condition, which obviously cannot be said for the subject property. I’m sure those aren’t the only differences in the properties.
I don’t want to sound like I am picking on Rascoff just for the sake of being facetious. I am not. I bring this up because the devil is in the unzillowables. I find it ironic that this time, the unzillowables are right in front of Zillow’s face, or nose, as the case may be.
Economists Crack Me Up
September 25, 2006 | Leave a Comment
I read an article from the USA Today about the national decline in both home sales and median price that took place in August. The following is a quote from that article:
Sellers have to lower prices to bring buyers
back into the market, says David Lereah, chief economist for the
National Association of Realtors. He has repeatedly cut his forecast
for the real estate market this year, and now is unsure how deep the
correction will be."If we have prices drop for the rest of the
year, and sales also continue to drop, then we will have a bad
situation in housing of balloons popping rather than air coming out,"
he said.But either way, "it’s a buyers’ market," he said.
Earlier this month, Lereah lowered his previous sales forecast. I have to say that I don’t envy his position in this whole situation. As the USA Today article pointed out:
the only situation that has received more intense analysis than the
housing market was the birth of Brad Pitt and Angelina Jolie’s baby
Being that Lereah is the Chief Economist for NAR, he is constantly looked to for market predictions (I guess that part of the job description). I wouldn’t want to be the one making all these predictions. It isn’t as if he can just say, "no comment," when he gets asked. No matter what he predicts, he is bound to be wrong at some point. I guess that is why Laurence J. Peter is quoted as having said, "an economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today."
Referees and REALTORS Explored
September 25, 2006 | 1 Comment
When I’m not practicing real estate, one of the things that I do is officiate basketball (I mentioned this once before). The letters from my officiating supervisors have been coming in, the rules clinics are coming up, and the season is on the horizon. All this got me thinking about the similarities between being a REALTOR and being a referee. Officiating has helped me tremendously when it comes to business, and vice versa. Here are some things I find similar about being a referee and being a REALTOR:
1) Referees adhere to a code of ethics, too.
2) For REALTORS, a well-managed transaction brings satisfaction. For the referee, it is the well-managed game.
3) REALTORS must build trust with their clients, referees must do the same with coaches and players.
4) Referees and REALTORS must possess and constantly improve upon their skills of interpersonal relations.
5) The technology of the Internet is changing the way REALTORS conduct business, Internet and video technology is changing the officiating landscape.
Those are five of the most glaring similarities I can think of. More on these and some others in future posts. I plan to expand on this relationship a little bit more, since The Charlottesville Area Real Estate Blog is the only place where you can get this perspective on real estate.
Incidentally, since I know, or at least I hope, that all of you have lives outside of reading real estate blogs; and many of those lives include sports (at least as a fan), you can always email me with officiating questions. There aren’t a lot of good places for the public to learn about what goes on in the minds of officials, so if you ask, I’ll answer.
The Blue Pill Takes You to the Carnival
September 25, 2006 | Leave a Comment
This week’s carnival is up at Matrix. Tons of great posts up, and no sign of Mr. Smith.
The Dual Agency Debate
September 22, 2006 | 1 Comment
One thing that I find most enjoyable about the blogoshpere is the good debate that takes place on a regular basis. For the most part, it is all very civil and very interesting. I came across a post from Greg Tracy at the Blueroof.com Blog that offers a view of dual agency that is very different from my own. Greg’s main point is this:
When used properly, it[dual agency] is not only good for both buyers and sellers in a real estate transaction, but can actually be better for
both. Think about it- one of the greatest challenges to a real estate
transaction is communication. Honest and timely communication between
parties. Having one agent representing both sides can eliminate much of
that challenge.
I completely agree with Greg that effective communication can be one of the greatest obstacles to a smooth real estate transaction. On the other hand, dual agency may streamline communication, but it also limits communication. Namely, it limits the amount of communication that an agent can have with his clients. He cannot tell the client everything that he would tell the client, were he not a dual agent. The flow of communication my be streamlined at the expense of the quality of that communication.
I’ve said this before, and I will keep saying it: THE ONLY REASON DUAL AGENCY EXISTS IS SO THAT AGENTS CAN TAKE HOME MORE MONEY.
Don’t get me wrong, I am not against anyone making more money, I just don’t think it should be done at the expense of the client’s representation. In my opinion, any potential benefit of dual agency is far outweighed by the risk assumed by the agent. Sure, the agent may not get sued today, maybe not tomorrow, but I’m not ready to risk my livelyhood so that I can make double the commission. Problems may not arise during the transaction, but there are no guarantees after everything is over. Read this comment left on the blog by Brianne regarding dual agency:
Thanks for bringing this up! When I had my home listed with one
realtor, they actually mentioned briefly that they offered dual agency
but them proceeded to completely skip over what that really meant.
Later we found out and were very upset and disappointed to feel like
our agent was playing both sides of the field. As a seller, how can you
expect to get good service knowing that your agent isn’t really looking
out for your best interests, but their own? I agree - this practice
isn’t on the up-and-up, and more buyers and sellers need to be aware of
it.
You can call it "hand-wringing" if you want, but I think dual agency is evil, and it needs to go.
My hat is off to Greg. His post is the first cogent, reasonable defense of dual agency that I have heard or seen in a long time. I don’t agree with it, but it is definitely beneficial to be able to have the debate.
Sellsius Breaks the Blog Barrier
September 22, 2006 | 1 Comment
Sellsius is running the Blog Marathon today. 50 posts in one day may clog up my RSS feed reader, but I love them for it anyway. I hope someone was waiting at post 25 with some water or juice or something. . .
Reddo Longa, Vendo Brevis
September 21, 2006 | 2 Comments
Hippocrates was talking about medicine, but Jim Duncan was talking about real estate. Quoth Jim:
Mark it down - marketing will become less and less a component of a Realtor’s core competency. Representation will.
I like bold, sweeping, assertions. They take gumption. This one from Jim fits the bill. If we assume that Jim is right, this is certainly good news for the agents that value their skills of representation, yours truly included. When I am a buyer’s agent, representation is paramount, in that I am not marketing or selling anything. When I am a listing agent, however, marketing seems to me to be almost, if not equally, as important as representation. If a listing agent can’t market the home to potential buyers he will have no opportunity to show off his skills of representation.
Jim may have a point. Marketing may, in fact, become less and less important in a REALTOR’s repertoire; and representation will most certainly become more important. Even as the balance between two shifts over time, they will always be linked to each other, and woe be unto the REALTOR who chooses one at the expense of the other.
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Disclaimer
My name is Daniel Rothamel. I am a licensed real estate agent in the Commonwealth of Virginia and a member of the National Association of REALTORS. As such, I adhere to a strict code of ethics and all laws with regard to equal housing, which is reflected in the content of this blog. My broker is Strong Team REALTORS, 86 Joshua Lane, Palmyra, VA 22963; (434) 589-5800. My VA Real Estate License number is 0225 077325. All of the opinions in this blog are mine, unless otherwise noted.
