Counter Intelligence: The Real Estate Cafe Weblog

New Year, New site for The Real Estate Cafe!

If you've wondered why this blog has been so quiet for the past six weeks, it's because we've been working on a new site which integrates our blog as well as content from The Real Estate Cafe's original web site.  As you can see from the Google search results above, if you type in "real estate cafe," you now get over 300,000 search results.  We're still #1, perhaps that's a reflection of our industry leading rebates, or the fact that we were the first real estate cyber cafe (see timeline on our wiki dating back to 1995).

To celebrate, we'd like to invite EVERYONE to join this ePhilanthropy campaign:  Regardless of what happens to housing prices in 2009, think we home buyers, sellers, and real estate professionals across the world can work together to turn 1,000 cups of coffee into $1 million for AIDS orphans? 

A continent full of AIDS orphans -- including millions in child-headed households -- needs you to respond ASAP.  See ASAP: AIDS Shelter Alliance Partner proposal on our wiki, and let us know if you'd like to view the slide show in person some at Starbucks in Greater Boston or via webinar beyond. 

We look forward to sharing this campaign with other real estate innovators, particularly those offering client rebates, next week at REBarCamp in New York. 

Technology Debriefing Post NAR 2008: Best of Breed money-saving tools for home buyers & sellers

Used GoGoPin's new browser-based ad designer to create this call for nominations for "Best of Breed" money-saving applications for home buyers and sellers following the National Association of Realtors convention in Orlando, November 7-10, 2008.  Watch this one minute screencast for more information on the proposed technology debriefing.  Should we meet in person in Boston, like real estate round tables and technology debriefing hosted in the past by The Real Estate Cafe, or online so anyone can participate?

If you attended the NAR convention and spent time visiting some or all of the 500+ vendors in the EXPO, we'd love to receive your nomination for "Best of Breed" money-saving tools for home buyers and sellers.

RSVP: Private research LIVE from Realtors EXPO

Home buyers, sellers, and fellow real estate innovators:  Wish you could attend the National Association of Realtors convention in Orlando this weekend but can't?  Interested in participating virtually?

I arrive Friday mid-afternoon and plan to spend all four days visiting 500+ vendors at the Realtor Expo to identify "best of breed" money saving opportunities for home buyers and sellers. Last July, I acted as the LIVE BLOGGER at Inman New's ConnectSF08 and am willing to provide private market research reports LIVE from the floor of the exhibit hall for a few select clients.

Are there are any vendors or competitors on this interactive floor plan you'd like me to check out?

As in the past, I can provide feedback by phone, email, text. This weekend, I hope to experiment with video, live or recorded, as well as screen sharing and video conference calls.

Fees begin at just $25 – $50 per vendor you'd like me to investigate depending on the research question and how you'd like the results presented. That modest fee would cover 15 to 30 minutes, additional time is negotiable.

WBUR/NPR debate: Do buyer agents really help consumers save money?

Having already posted one comment to WBUR's heated discussion about "what caused the housing crisis and how to fix it," I was content to watch the debate unfold yesterday until several posts began spreading misinformation about the role of buyer agents and whether they help clients save money.

First, there is some truth that the current two-sided real estate commission does not align buyer agent compensation with performance. That's why some in the industry offer rebates and others are calling for commissions to be divorced. If that single reform comes out of this crisis, conflicts of interest would be reduced, competitive options would increase, and consumers would save billions of dollars as argued in these blog posts written two to three years ago:

$60 Billion question: How do consumers uncouple real estate commissions?

10 Mega-tends push real estate commissions to a tipping point

Contrary to assertions on WBUR's blog, some REAL buyer agents, not counterfeit buyer agents or "designated agents," actually do save their clients money by (1) rebating some or all of the buyer agency fee built into sales prices, and (2) by helping their clients shop wisely, time the market, and negotiating aggressively on their behalf. For tangible evidence, see Wall Street Journal article on the 100% commission rebate offered by The Real Estate Cafe, our menu of fees & rebates, and map of client savings totaling over $1 million during a twelve month period.

At least one other buyer agent in Chicago has helped clients save more than $1 million during a twelve month period and there are probably others. More importantly, new referral sites like http://www.ProOffer.com and conversations like this could bring performance based compensation into the real estate industry.  My guess is that millions of real estate consumers, both home buyers and sellers, would agree that reform is long overdue! 

What's your opinion?  Do buyer agents really help consumers save money?

Response to WBUR/NPR: American housing & finance: What went wrong & how to fix it

WBUR / NPR OnPointRadio:  Banks and Housing in Crisis
American housing and finance. What went wrong, and how to fix it.

You can join the conversation. What new rules should be in place? Should we make it more difficult to buy a home? Should we stop banks from playing with mortgage securities? Should we put up big firewalls on Wall Street to head off future disasters? Tell us what you think.

MY COMMENT TO WBUR BLOG, yours are welcome as well:

"Speed bumps" to protect the housing market from overheating? That's the role of a buyer agent in individual real estate transactions. Unfortunately, over the past 15 years, the real estate lobby pushed state legislatures nationwide to remove speed bumps by legalizing conflicts of interest inherent in "designated agency."

BLOG POST: Misleading home buyers: Conflict of Interest? What conflict of interest?

From my day-to-day experience as a buyer agent in Greater Boston, I know there have been countless "bidding wars" over the past decade. Conflicts of interest and manipulative business practices made those bidding wars worse. Now the cost is being passed on to society as this case study demonstrates:

"My so-called buyer's agent (who promptly switched roles at contract signing without explanation), initially advised me to bid $750,000 for my house of choice, which was listed at $699,900. When I told her that such an offer was beyond my price range, she was quite adamant that I not offer anything under the list price. When I finally backed out the deal because of her bait and switch scam, I later heard that the house in question sold shortly afterwards for $682,000—in other words, nearly $70,000 less than the bid suggested by my so-called buyer agent."

"This type of price inflation (caused by seller's agents masquerading as buyer's representatives) must have a very distorting impact on housing costs. The economic fallout is enormous: ordinary citizens are forced to move out farther in search of decent, affordable places to live, which leads to a host of problems connected with traffic congestion, suburban sprawl, etc."

"As I perceive it, the real estate cartel's use of dual agency [a.k.a. "designated agency"], which works to the detriment of the average consumer while enriching dishonest agents through the practice of double-dipping, contributes significantly to the manifold problems we see in the residential housing market and therefore should be fully exposed."

This case study is an example of what's wrong with dual agency / designated agency, and why I believe designated agency laws should be repealed and "blind" bidding wars should be managed with regulatory "speed bumps."

So, if Congress, policy makers, and consumers are asking what factors contributed to the overvaluation of housing markets, shouldn't dual agency and blind bidding wars be included in that investigation? My hope is that others will agree that it's time to expose systemic flaws and conflicts of interest in the residential brokerage practices, and the cost of blind bidding wars, not just to individual buyers but to tax payers.

This three minute audio post proposes four regulatory reforms to protect consumers — buyers, sellers, and tax payers — in the future. Please listen, comment, and / or join us for a TweetUp in Boston to listen to the rebroadcast of this program, 7-8pm in Boston.

AUDIO BLOG POST: What regulatory reforms are needed to protect real estate consumers?

Thank you WBUR for your continued coverage of this subject!

Limited time: "Bailout Bonus" for 4th quarter bargain hunters

As the housing market enters the final quarter of 2008, The Real Estate Cafe is contacting new and long-time clients to get an update on their home buying plans.  Can you believe that one member of our 1,000 Click Club has viewed 6,247 MLS pages via The Real Estate Cafe’s MLS access system during the past 2.3 years?  More than half of those page views (3,847 pages) have been since the start of 2008 and about a third (1,270) were during the 3rd quarter.  If you're bargain hunting during the final quarter of 2008 and early 2009, can The Real Estate Cafe help you save money by serving you "a la carte"?

SPECIAL BAILOUT BONUS:

To encourage you to take advantage of falling prices during the current financial crisis, we’re willing to reduce our hourly consulting to just $50 for any work requested before close of business TODAY (offer extended through Wednesday, October 8, 2008 if payment made online by 5pm). That’s a savings of 50-67% off our current billing rate of $100-$150 per hour. So, if there is any work we can do to help you — for example, download & forward MLS listing data so you can analyze price trends — please let us know ASAP. At a minimum, would you like us to add expired listings to your daily email of MLS listings? An amazing, 1,136 single family listings expired across MA last week (9/27-10/3/08) alone; and surprisingly, 498 listings were priced UNDER $319K!

How will the Bailout Bill impact home buyers & sellers? txt your answer

If you're unable to join us at the TweetUp tonight at TogetherInMotion, One Broadway in Arlington, text your response to our Wiffiti board so anyone online or at the TweetUp can read your perspective. 

Send us an email if you'd like to participate in one of our upcoming Bubble Hours or "Fear of Foreclosure" support groups for anxious homeowners.

What regulatory reforms are needed to protect real estate consumers?

Flames of "irrational exuberance" burning Realtors, too

I've spend the morning deconstructing Realtors are not immune to foreclosure, an amazingly transparent blog post on a leading real estate web site. The author's concluding question -- Why did so many people, including Realtors, buy homes in 2005? -- has been and will continue to be the spring board for innumerable blog posts, talk show interviews, research by economists and parodies on YouTube. But now imagine what the authors of Freakonomics or Saturday Night Live could do with this admission that some real estate agents "helped people buy homes that they could not afford," and then repeated the same mistake themselves.

Personally, I'd love to see investigative reporters dig into the conflicts of interest in the real estate industry and expose how deceptive and manipulative business practices, like dual agency and blind bidding wars, fanned the flames of "irrational exuberance" and, as this highly respected blogger admits, ultimately burned Realtors themselves.

Perhaps industry regulators will create new disclosures to protect consumers and prevent another trillion dollar collapse of the housing market in the future. Were you aware that a Washington think tank estimated a "loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner"? Historically, potential home buyers have been advised to ask agents about their sales volume, but now it's wiser to ask prospective buyer agents if any past clients are upside down on their mortgages or involved in foreclosure. What if a such a negative equity or "foreclosure disclosure" were required by law?

Outrageous some might scream, unrealistic others would argue but blogs have already created a decision-making tool for web-savvy home buyers to decide who will best protect their financial interest. Try this experiment, visit two real estate blogs and see what their authors have written about the housing bubble. Look at their posts during 2005 -- was your prospective buyer agent echoing NAR's "anti-bubble" spin or warning homebuyers about the coming meltdown?

In retrospect, this Real Estate Cafe blog post from April 2005 sounds prophetic: Will mobloggers pop the real estate bubble?

My hope is this blogger's admission that Realtors are not immune to foreclosure will expand discussion about systemic flaws and conflicts of interest in the residential brokerage practices, and their cost not just to individual buyers and Realtors but to society. Who could imagine a better time and place for some "straight talk" about the need for real estate reforms than John McCain's speech tonight at the Republican Convention in this blogger's backyard?

"Real Estate Olympics" Redo: Call for Best "Do-it-yourself" money-saving tools at each step in the home buying / selling process

A leading group of real estate technology innovators is using a sports metaphor, the "Real Estate Olympics", to launch a compelling, timely competitive for the "Real Estate Pacesetter of 2008."

However, the first nomination (Zillow.com) and next week's run off between eight companies to pick a single winner suggests that this competition will be a battle of the GIANTS. Compare that with Seth Godin's presentation on "Small is the New Big" to the same group of innovators at ConnectNYC07 and  Time Magazine's Person of the Year in 2006: "YOU".

If you translate those MEGA-trends into an Olympic metaphor, you get a different kind of competition and a different call for "Best of Breed." Just as the Olympics have 302 events, there are hundreds of steps in the home buying and selling process and real estate innovators empowering consumers with money-saving, do-it-yourself tools at EACH STEP in the process.

For more than a decade, The Real Estate Cafe's has maintained a list of "Best of Breed" innovators at each incremental step, and we are eager to share them with our clients and others.  Real Estate innovators, if you think you should be on the list, please send us an email:

1. Nominating yourself for the appropriate step in the home buying and selling process, and

2. Explaining how you help do-it-yourself home buyers or sellers save money (or time).

Any nominations we receive before this weekend from innovators, or consumers who rave about them, will be showcased at our first "FSBO Trade Mart," tentatively scheduled this weekend at TogetherInMotion.com, One Broadway, Arlington, MA.  Watch Twitter & FriendFeed for more details.
http://Twitter.com/RealEstateCafe
http://friendfeed.com/realestatecafe