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Thursday
Jun162011

Experimenting with Real-Time Twitter feed on Boston.com real estate ad

The image above is a static screen grab, but you'll find The Real Estate Cafe's new, experimental LIVE Twitter feed on our Boston.com ad.  If you'd like to know more about how Twitter and other "real-time" tools are "revolutionizing the internet, again," watch what's left of the 10 minute presentations from the 140 Characters Conference (140conf) in New York via UStream's LIVE video or follow the fire hose of actionable information being Tweeted from that event on this Twitter aggregator!  You can see the comments we've made and questions we've asked using the #140conf hashtag here.  Your feedback is welcome below or by replying to our individual Tweets.  You'll find some idea starters and discussion questions there.  We'd love your ideas about how to best use our LIVE Twitter ad to inform your home hunt and help you save money -- our mission for the past 16 years!  If you reply to one of our Tweets, may we Retweet your thoughts on Boston.com?  If not, please DM (direct message us) via Twitter.

Friday
May272011

Test offer: Get 50% off hourly fee, plus 100% REBATE!

SORRY THIS OFFER HAS EXPIRED.  Click for current deals.

Boston.com readers and others, we'd love to know what you think of this special offer.  What other kinds of "deals" would you like to see The Real Estate Cafe add to it's Menu of Savings this Summer?  Would you like to participate in round table discussions, online or off, about how to save money in real estate transactions?  Do you know of any savings opportunities you'd like to share with fellow do-it-yourself home buyers or sellers (FSBOs)?

If you're one of the many technology innovators, living in Boston or beyond, developing "buyer-centric, user-driven, or savings-focused" tools to help home buyers or selles save money, please feel free to correspond with us privately via email or direct message on Twitter (@RealEstateCafe). We've acted formally and informally as advisors to real estate start-ups in the past.  Here's an example of a technology debriefing we hosted in January 2009 at the Berkman Center for Internet & Society at Harvard Law School.

Friday
May272011

"Consumer-centric" vs "buyer-centric, user-driven & savings-focused" real estate business models

Thought leaders in the "intention economy" are careful to distinguish between user-centric sites and user-driven sites, but that's not been the case in real estate.  If you are a tech-savvy, do-it-yourself home buyer, you should be careful to identify whether the real estate site you are using is (1) consumer-centric, (2) buyer-centric, (3) user-driven, (4) savings-focused or some combination of the four. 

Home buyers are increasingly using sites that enable them to do their own work, but a self-directed house hunt is not the same as a user-driven process where buyers manage their own data and use it to create new money-savings opportunities. Because so many tech-savvy internet users are capable of doing much of the real estate transaction themselves, fee-for-service consultants will prosper as user-driven sites enable buyers to issue Personal Requests for Proposals or Personal RFPs.

Meanwhile mega-giant Realogy is trying to reposition itself as being “consumer-centric” through their innovative franchise, Better Homes & Gardens.  But buyer beware: "consumer-centric" does not necessarily translate to buyer-centric, user-driven, or savings-focused. While they are wisely introducing tools and functionality to let buyers direct their own house hunt online, they are NOT passing the savings on to consumers.

As others begin using “consumer-centric" marketing language, agents who work at traditional listing agencies, like Realogy's family of nearly 15,000 franchise offices will continue to have two obvious obstacles that prevent them from really being buyer-centric, user-driven, or savings-focused: 

1. Traditional real estate agencies cannot simultaneously be “seller-centric” and “buyer-centric," which is why buyers should refuse to give their consent to designated agency (a.k.a. counterfeit buyer agency); and

2. Traditional real estate agencies cannot maximize savings if they maintain their one-size-fits-all commission structure, when tech-savvy, do-it-yourself home buyers want to drive their own process and chose to pay for services “a la carte.”

In contrast, as one of the nation's first fee-for-service business models, The Real Estate Cafe’s “savings-focused” business model has been featured in Wall Street Journal and we're always looking for ways to expand our Menu of Savings. We’re eager to serve tech-savvy buyers who are open to experimenting with, benefiting from, and maybe even co-creating new "user-driven" tools.  Are you one of them?

Tuesday
May242011

Broaden your perspective on falling housing prices: Boston & Beyond

Prices are down again, but are they affordable? That question caused Boston Real Estate Now blogger Scott van Voorhis to draw a stark contrast between the median sales price of single-family homes in Greater Boston during the past month, $417,000 in April 2011 versus $250,000 in 2000.  Beyond the numbers in that decade-long retrospective, some buyers -- particularly first-time home buyers -- should be reminded that the tech bubble had inflated housing values to unsustainable levels in 2000 - 2001 and beyond the Boston Foundation's concern about "decreased affordability," more important voices predicted falling prices and warned of potentially devasting impact on banks.

In an article published on August 13, 2001 entitled "Feds Report: Housing Starting to Weaken", nationally-syndicated columnist Lew Sichelman cautioned that:

Deputy Comptroller of the Currency Nancy Wentzler reminded reporters recently that housing values dropped 8 percent on average during the last recession in 1991. Not only could it happen again, she said, it could "happen rather abruptly."

In the first federal reserve district, the Boston bank reported that while the overall housing market is still strong, "signs of softening are emerging."

Housing prices, as the Boston Foundation wrote, had risen to a median sales price of nearly $300,000 in Greater Boston, a jump of more than 50 percent over three years.  That defied predictions made in November 1999 by James Smith, former Chief Economist for the National Association of Realtors, that a recession would occur after the Presidential election of 2000, followed by a two to three year downturn in the housing market.

Instead of raising interest rates to cool housing prices, the Fed dropped them fourteen times after 9/11 to stimulate the economy and housing market.

By June 10, 2005 the New York Times ran a graphic counting the number of "major world newspaper" bubble features that had been published in the days of May: 0 in 2001; 18 in 2002; 20 in 2003 (a relative plateau); 35 in 2004; and more than double that to 77 in 2005 (and Fed Chief Alan Greenspan only weighed in with his "froth" concerns on May 20, 2005).

In retrospect, it is clear that the Fed knew that housing prices were inflated and that a price correction could have widespread impact on banks and the economy.  Ten years ago this summer, Sichelman reported:

...Deputy Controller Wentzler is worried enough that a crisis could be just around the corner that her office has advised the national banks it oversees to take a look at their book of mortgages to make sure they are not over-exposed.

"What we are suggesting from all the models we are doing is to watch this carefully make sure we stress test for a potential rather steep and decided drop in house prices that could effect collateral values at banks," she said.

Specifically, Wentzler is concerned that banks could be hit by a double whammy -- an increase in delinquencies compounded if appreciation goes flat and an increase in foreclosures if layoffs accelerate.

As Voorhis wrote, "Sound familiar?"

Friday
May202011

Would divorcing the two-sided real estate commission deliver more savings than Groupon?

Inman News, the leading real estate technology website just published an article entitled "Conflict, confusion and risk in real estate commissions" which documents the growth of fee-for-service business models, like The Real Estate Cafe.  It's a good overview, but wish Inman News had expanded on their opening comment that "Others ...think the commission-based structure should be reformed."  Five years ago, Inman published a guest perspective from an industry expert entitled "The End of the MLS as we know it:  Let's get rid of interbroker compensation" which bluntly stated:

"The real estate industry now operates multiple listing services that not only draw attacks for suppressing competition, but also have at their core a service that is obsolete and inefficient: the communication of interbroker compensation offers."

Following feature stories about falling real estate commissions in CNNMoney and AOL that year, The Real Estate Cafe blogged about our hope that St. Patrick's Day 2006 would be remembered as the year home buyers and sellers began to "BYOB" -- Bring Your Own Brokers -- and compensate them separately.

At that time, 10 mega-trends were pushing the two-sided real estate commission to a "tipping point" and some real estate consumer advocates hoped the FTC / DOJ would require MLS's to "uncoupled" or "decoupled" commissions in 2006, fifteen years after the Consumer Federation of America first called for that reform.  Although dated, this 90 second slideshow and wiki on divorcing real estate commissioins help explain why:

Hard to believe there has been so little progress towards uncoupling or divorcing real estate commissions over the past five years, when that change alone could deliver billions in savings to real estate consumers annually.  With nearly one in three households upside down on their mortgage, can home sellers -- whether they are using a listing agent or selling on their own -- afford to pay a traditional co-broke?  Nonsense!  Why pay a 2.5-3% co-broke when you're going broke?  If the co-broke fee is effectively an industry imposed real estate transfer tax, why haven't regulators intervened to protect consumers from unnecessary expenses?  

A solution won't come from the Consumer Financial Protection Agency because reforming residential brokerage practices is outside their regulatory scope.  However, if innovative lenders will allow buyers to finance real estate consulting fees, thereby liberating both buyers and sellers from unnecessary costs, that would turbo charge the growth of the fee-for-service movement in real estate!

Maybe Inman News can invite their 2006 quest columnist to update his perspective.  At the time, he had already "argued for five or six years that interbroker compensation should go the way of the MLS book and broker subagency. Recent events persuade me that the industry is ripe for this change now."  What's your opinion?