Keeping an eye on real estate in Massachusetts? DIY homebuyers, visit our new experimental blog and tell us where you see Boston housing prices going in 2012 and beyond.
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Keeping an eye on real estate in Massachusetts? DIY homebuyers, visit our new experimental blog and tell us where you see Boston housing prices going in 2012 and beyond.
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It's All Saint's Day 2011 and my thoughts have turned once again to the practice of burying St. Joseph statues upside down. Unbelievable as it may seem, an article on same subject was the most forwarded link in the Wall Street Journal four years ago today -- five rankings ahead of Google's new G-Phone!
Who would have guessed that one in four mortgages would be "underwater" four years later. Maybe that's part of the reason that some vendors are backing way from St. Joseph as a miracle cure (the metaphor the Wall Street Journal used four years ago), and repositioning the saint as someone who protects you from making bad real estate decisions:
“Some people perceive this as a good-luck charm; others see it as something much more divine,’’ said Phil Cates, founder of St. Joseph Statue LLC, which sells kits with 4-inch and 8-inch statues.
Ultimately, Cates said, “it’s about protecting people against bad real estate decisions. I think he’s more of a protector than a home-seller.’’
Others are making repeated disclaimers that burying a St. Joseph statue does not guarantee the quick sale of your home, but advocating the practice nonetheless because "It couldn't hurt."
Still others, including at least one Catholic publishing house, are offering St. Joseph as a model and source of fortitude and faith for millions of households facing foreclosure and financial difficulties. More than a decade ago, a similar impulse caused me to write an article entitled "Doing Justice to the Just Man."
If China is playing the lead roll in the bailing out business, do you think distressed home sellers would be wiser to bury Buddha statues upside down instead of St. Joseph? What about consulting witches and psychics? One in Greater Boston is reportedly performing an average of two house blessings a week -- and that was in May, not a Halloween prank.
Beyond misguided superstition is the wisdom and experience of "divine alchemy." Suffering can bring out virtues, human if not saintly, but financial difficulties can also cause one to become discouraged or embittered. If falling temperatures are causing you to give up on selling your home this year, maybe it's time to rescue St. Joseph statues before the ground freezes.
If you do, we'd be glad to exchange your statue for one of two books offered by Pauline Press -- think of it as a St. Joseph statue buyback program (limited to first 10 respondents):
If you're facing foreclosure, could participation in a prayer group -- online or off -- provide an emotional and spiritual safety net during the holidays? Advent is a season of waiting -- would connecting with others who are waiting for an opportunity to modify their loan or sell their home help you hold onto hope?
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Over the past sixteen years, The Real Estate Cafe has experimented with a variety of alternative, money-saving approaches to real estate brokerage. Today, we're rolling our latest experimental dish: DIY crowd financing with a 16% ROI! We're not talking about crowd funding someone's mortgage or downpayment at this point; just a short-term loan of $1,600 to meet our operating expenses.
We've already received $650, and would like to raise the balance of the $950 ASAP. Please note, we're NOT asking for donations! Anyone lending money will be REPAID by approx. September 20, 2011, after we receive a referral fee on the sale of a townhouse in Cambridge, MA. To get people to act TODAY, we're offering a guaranteed 16% rate of return, so for every $100 you advance, you get back $116. How does that compare to the rate of return you're getting from your bank or other investments?
Why 16%? Because we're celebrating our 16th anniversary acting as consumer advocates and Guardian Angels for home buyers. After trillions of dollars have been lost in home equity around the country, the services of a tech-savvy buyer agent -- with ZERO conflict of interest -- is more important than ever (see our video and article in Wall Street Journal about our 100% rebate option).
We need funds ASAP, first to pay rent and second to relaunch our website on http://RealEstateCafe.com (see image of original site from 1995). Although this is only the second time we've asked clients to "chip-in" to meet our own needs, we first proposed a DIY micro-fundraising campaign a decade ago called ASAP = AIDS Shelter Alliance Partners and encourage all of our clients to share a portion of their rebate with local organizations through our informal "Rebate-it-Forward" program.
If you're a past client, current client, or just want a quick return on a small investment, call or text us at 617-661-4046.
PS. If you think 16% is a good rate of return, ask how much money our home buyer clients have saved in the past. Once called one of "100 Interesting, Influential & Impressive People in Real Estate on Twitter," we invite you to follow us on http://Twitter.com/RealEstateCafe to see what we cook-up next!
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Comment on @InmanNews blog post: Groupon, other big 'group buy' sites slow to embrace real estate
Like nearly anything online, there are "do-it-yourself" options for anyone in the real estate industry - broker, lender, seller, or product / service vendor -- to create and manage their own group offers. After looking briefly at other solutions, The Real Estate Cafe has begun experimenting with http://www.chompon.com and hope that deal syndication platform will deliver significant advantages including but not limited to the following:
1. Smaller processing fees so we can retain a larger share of the revenue collected and offer larger discounts to homebuyers and sellers (FSBOs or "for sale by owners"):
2. Ability to create, deliver and even edit / extend deals in "Real time" (as suggested in the idea starter we tried to seed at REBarCamp Boston);
3. Ability to offer a variety of offers at the same time;
4. Ability to select / share deals created by other money-saving innovators, locally or nationally, syndicated through Chompon;
We are actively seeking deal syndication partners in five broad categories: sellers, lenders, real estate brokers, and product and service vendors to co-create and aggregate money-saving offers through locally-initiated homebuyer / homesavings clubs.
Beyond what any single company or organization might offer, or any group buying site might prepackage, there are also new tools in the marketplace that will empower consumers to self-aggregate and negotiate price concessions from vendors and professionals inside and outside the real estate industry. That's why some are calling sites like http://Loopt.com a "reverse-groupon" model.
But DIY homebuyers don't have to wait for group buying sites to deliver savings, or organize groups to negotiate their own deals. One in three of The Real Estate Cafe's clients proposed their own fee / rebate last year. If you don't like what you see on our existing Menu of Fees & Rebates, propose your own money-saving deal!
The categories in this Group Switching poll give you an idea of the kind of savings the "next generation of consumer power" seeks to deliver on household bills. For more info, contact us directly or follow http://Twitter.com/RealEstateCafe and help us coauthor and deliver a folksonomy of consumer savings for home buyers, home sellers, and homeowners.
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@TheNextWeb
Online accounts could be verified using Indian government’s unique ID project, Aadhaar http://tnw.to/19XJu by @tsuvik on @thenextwebin
http://twitter.com/#!/TheNextWeb/status/84202373072957440
EXCERPTS
For those who aren’t familiar with Aadhaar, it is an ambitious project from Indian government which aims to create a database of the country’s residents along with some simple biometrical data, and later issue a multipurpose unique national identity number to them. This database can also then be integrated by other ministries into their databases for various government purposes.
Although user participation in this project is completely voluntary and not mandatory, it is recommended to sign up for the ID number so that you can enjoy certain facilities that would require it.
Further, in an attempt to woo the app developers to create apps, he announced that the API calls for all third party apps, will remain free for the next few years. He said:
Imagination is the limit as far as what applications could be built upon the Aadhar platform.
People who have received these numbers will look for the benefits of the number. This is where the app ecosystem will come in. Different partners can build apps and provide benefits across different sectors like healthcare and banking
In the US, real estate agents, developers and lenders already have tools to access the digital identity of potential homebuyers and the Patriot Act requires homebuyers to verify their identity at the closing table. So whether the digital equivalent of the voluntary ID system in India emerges in this country or not, building blocks already exist to create a real estate app ecosystem based on a “Homebuyer ID” assuming many of the 225+ pieces of information RealTag.com uses to evaluate potential home buyers are aggregated from public data sources.
Real estate use cases in the public, private, and non-profit sectors are not hard to imagine; and cost savings from more efficient allocation of housing subsidies could motivate the government to take the lead. In the public sector, the development of a Homebuyer ID would enable HUD (US Department of Housing & Urban Development), state and local housing organizations to verify, qualify, and select applicants for affordable housing programs more efficiently, thereby reducing costs and stretching the impact of limited tax dollars.
In the private sector, the development of a Homebuyer ID would also unleash new money-savings ways of buying and selling real estate, including the ability for home buyers to manage their own identity (think reverse-RealTag or “MyRealTag”) and the creation of an MLS for buyers. This would allow home sellers, whether represented by a listing agent or selling “for sale by owner,” to search homebuyers as easily as buyers currently search listings. The ability to match buyers and sellers more efficiently would reduce transaction costs, if not bypass the real estate industry’s bloated two-sided commission built into the MLS, and result in billions of dollars in savings annually for consumers.
How do we get there from here? Want to talk about next steps, in the US or India?
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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.
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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.
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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?
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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?"
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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?