Counter Intelligence: The Real Estate Cafe Weblog

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.

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?

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!

"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

CARPE DIEM: Expired & canceled listings create "commission-free holiday" for buyers & sellers

Massachusetts home buyers, if you have been waiting for housing prices to slide into your acceptable range, this could be time to "carpe diem."  As shown in the graph above (click for larger image) of MLS activity during June & June over the past 15 years (1994 to 2008):

• The number of off-market properties -- expired, canceled & temporarily withdrawn listings -- surged to a new record of 16,319 properties just after midnight.*
• In contrast, sales have fallen from a peak of 19,180 in 2006 to 12,335 in 2008 (as of 12:30am, August 1). 
• That means that sales are down by about a third, while off-market listings have nearly doubled since 2005 when we first wrote that expired listings were a leading indicator of the real estate bubble.
• Over the past three years (2006-2008), more properties have been pulled off the MLS than sold during June & July.  For every three listings closed in the past two months, four were pulled off the MLS statewide in Massachusetts.

What do these raw numbers mean to buyers and sellers?  Think of expired and canceled listings as a two-sided window of opportunity, or the real estate equivalent of a "tax-free holiday."  Sellers can accept an offer about 5% less than their last asking price and still net the same profit because they are no longer obligated to pay a traditional real estate commission.

Will this "commission-free holiday" be enough to motivate buyers to make offers, or will motivated sellers in Greater Boston begin making offers to well-qualified buyers as is happening in other markets? 

The Real Estate Cafe is advertising buyers on Zillow to make it easier for motivated sellers, particularly those who have received pre-foreclosure notices, to find them. If none of our buyers wants to purchase your home, we offer seller services "a la carte" on a fee-for-service basis.  If you'd like to learn more about how to sell your home "for sale by owner," we're organizing a FSBO support group and invite you to see our "FSBOs on Steroids" presentation.  If you're not interested in selling on your own, we'd also be glad to do a Listing Agent Report Card to help you select a new listing agent and try to negotiate a reduced commission.  Email for more details.

* Technical note:  Includes all residential property classes in MLSPin:  single family, multi-family, condominiums and land. Temporarily withdrawn listings available for 2008 only.

BUBBLE HOUR: Slowest real estate sales since 1991 got you cheering or crying in your beer?

Bubble watchers in Massachusetts, time to pull out the beer googles and celebrate today's headline in the Boston Globe about the slowest pace in real estate sales since 1991 with a Bubble Hour?

Sellers, does the same news have you crying in your beer, prepared to drop your price again, or tempted to drop your real estate agent (once your listing contract expires, of course) and try "for sale by owner" this Fall? 

If you're one of the 15,000 sellers across Massachusetts who's listing has already expired, been canceled, or temporarily withdrawn from the MLS during the past two months, The Real Estate Cafe is eager to talk to you about selling for sale by owner, or help you evaluate and select your next listing agent. 

We've just returned from LIVE BLOGGING the leading real estate technology conference in San Francisco, and are eager to demonstrate new money-saving tools and web sites. Do-it-yourself home buyers and sellers, would you like to see those demos in a small group or a personalized one-on-one presentation?  We're eager to take advance reservations for a "FSBO Cruise" in Boston Harbor aboard the Yacht Starship: $99 includes a private, one-on-one presentation of our "FSBO on Steroids" seminar plus a lunch buffet with four-star cuisine.

Sellers:  we don't see the housing bubble through rose-colored glasses, so if you are intimidated by selling "for sale by owner," The Real Estate Cafe can prepare a "Listing Agent Report Card" instead and try to negotiate a reduced commission.  If you pay in advance for our analysis, we'll rebate one-third of our referral fee.

Part II: Million Dollar Markdowns coming to a neighborhood near you?

Follow-up to Part I: Housing slump hits Cambridge: 1 in 3 single family homes selling below assessed value

As graphed in the blog post above, homes selling below assessed value are increasingly common, but what was newsworthy about the Boston Globe's story last week is the magnitude of how far below. During the first six months of 2008, two homes in Cambridge sold for approximately $2 million below their original asking price.  More significantly, both sold for more than $1 million below their assessed value based on our analysis of MLS data shown below.

Can you guess the address of these two properties in Cambridge?  

Original asking price:  $5,300,000
List price before offer accepted:  $3,700,000
Price reduction Original vs list price:  $1,600,000
Final sales price:  $3,100,000
Price reduction below last asking price:  $600,000
$2,200,000 Savings vs original asking price
% Savings vs original asking price:  42%
Assessed value:  $4,122,100 (2007)
Saved vs assessed value:  $1,022,100
Sales price / town assessment:  75%
% below assessed value:  25%
Guess how many days on market?

Are you seeing Million Dollar Markdowns in your local housing, elsewhere in Massachusetts, the US (or world)?

Original asking price:  $5,500,000
List price before offer accepted:  $3,995,000
Price reduction Original vs list price:  $1,505,000
Final sales price:  $3,650,000
Price reduction below last asking price:  $345,000
Savings vs original asking price:  $1,850,000
% Savings vs original asking price:  34%
Assessed value:  $4,917,400 (2008)
Saved vs assessed value:  $1,267,400
Sales price / town assessment:  74%
% below assessed value:  26%
Guess how many days on market?

As reported by the Boston Globe, The Real Estate Cafe has monitored "Million Dollar Markdowns" -- luxury homes which have sold at least $1 million below their original asking price -- on and offer during the past. See links in blog posts from 2007:  Sweetest Deals of 2006 and MIT Professor: Housing prices could decline another 20%.

As McMansions become less desirable and the housing market drags the economy in recession, do you think "Million Dollar Markdowns" will become more common in your local housing market?  Are owners already putting them on the market now to minimize their losses?  Will the expiration of estate tax cuts enacted in 2001 cause the luxury housing market to collapse, or will Congress and the new president extend the tax cuts permanently?

MicroPoll:  Would you like to attend a "Bubble Hour" to discuss homes selling for below assessed value in Greater Boston?  (See one click survey & results.)

Carpe Diem:  Hire The Real Estate Cafe to conduct original research like this, and save money on your next real estate transcation by taking advantage of these limited time offers. 

If airlines have fare sales, should real estate agents? Part 2

Poking fun at the current cover story in Barron's Magazine, "Bottom's Up: This Real-Estate Rout May Be Short-Lived," Bill Apgar of the Harvard's Joint Center for Housing predicted, "There will be 10 articles a month [like that] until we hit the bottom, and the last one will be right."

When will it be the right time to buy?  That's what all The Real Estate Cafe's clients are asking.  Some of their house hunts began two years before the market peaked, and are now into the third year of falling prices.  Nearly 50 of our active buyers have looked at more than 1,000 MLS page views. Twenty-one have looked at more than 1,000 MLS pages in the past year alone, but only four of them have paid any fees to The Real Estate Cafe.

Unlike listing agencies who represent sellers and charge 5% to 6% commissions, or dot.com start-ups that are venture funded, The Real Estate Cafe pays it's overhead almost entirely from hourly consulting fees paid by clients.  With so many buyer waiting out the housing bubble, those fees have slowed to a trickle.  Now, after 13 years, we need your financial support.

We constantly look for ways to help you save money, by learning more about the housing bubble and the latest technologies.  Today, for example, we attended a seminar on State of the Nation's Housing and a Foreclosure Prevention Workshop. This weekend, we'll participate in PodCampBoston (for the third time.)  Next week, we'd like to participate in two real estate technology conferences in San Francisco:  REBarCamp and Real Estate Connect.

To do so, we need to raise $2,000 to $3,000 quickly.  You can help us, help you save money by selecting one of the following special offers:

Money-saving offer #1:  Fare sale
Repeat the Fare Sale we used successfully in 2007 to get two to three clients to prepay $500 to $1,000 in exchange for 1 to 3 hours additional work for FREE.  Email for details.

Money-saving offer #2:  Experiment with monthly fees
Introduce an optional monthly subscription fee. If you agree to pay $250 per month, we’ll slash our our consulting fees, normally $100 to $150 per hour, to $50 per hour for five hours—that’s a savings of 50% to nearly 70%! Like frequent flier miles, hours you prepay accumulate and you can use them any time you like.  Email for details.

Money-saving offer #3. Attend educational seminars
Host a technology debriefing after our trip to San Francisco to share best money-saving tools and tips from the two real estate technology conferences. We would like to host two events, one for buyers and the other for FSBOs ("for sale by owner") within 10 days of the conferences at TogetherInMotion, One Broadway, Arlington, MA.  $49 per household, per event.  Email for details.

Finally, your best savings opportunity may already be part of our normal menu of fees & rebates.  For example, one of our $3,000 flat fee options enables you to buy down our hourly consulting fee from $150 per hour (without retainer) to $75 for 40 hours - that's a 50% savings before payment of any performance bonus.  (Contact us for more details on this option and others.)

We encourage buyers to wait for the housing prices to correct, but don't wait to take advantage of these savings opportunities. Once we raise $2,000 to $3,000, they'll be gone.

Fee-for-service real estate: professional advice without cartel pricing

Comment posted to debate on USNews & World Report's real estate blog, Home Front, asking: "Do you need a real estate agent to sell your home?"

More than a decade after the former chief economist of the National Association of Real Estate said...

"The next major revolution in real estate will be fee-based services replacing the blanket commission pricing that has dominated the industry for so long."

...it's discouraging to see this debate reduced to two options:

"There are two general ways to sell a piece of real estate. You can do it yourself (usually known as doing a for sale by owner, or FSBO), or you can utilize the services of a real estate agent."

There are dozens of tasks in both the home buying and selling process that web-savvy real estate consumers can purchase "a la carte" to meet their specific needs, without incurring a five to six percent real estate commission.

IMHO, presidential debates should not ignore credible third party candidates, and this residential debate should not exclude alternative fee-for-service business models either.  Those business models -- together with long overdue industry reforms -- will enable buyers and sellers to save billions of dollars annually without sacrificing the benefits of professional advice.

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

If you live in New England and would like to join our experimental "FSBO Support Group," please contact us by phone (617-661-4046) or email.

Part I: Housing slump hits Cambridge: 1 in 3 single family homes selling below assessed value

Part I:  On Sunday, July 13, 2008, the Boston Globe published a lead story in City Weekly entitled, In real estate sales, not all cities are equal.

A blog post earlier today by Redfin stated that "several single-family houses sold for less than the assessed value" in Cambridge, but the magnitude of the price correction underway is far more substantial.  As shown in the graph above, approximately one in three single family homes sold below their assessed value in Cambridge during the first six months of the past two years.  (The Real Estate Cafe's analysis was limited to the first two quarters of each year because we assume that a higher percentage of homes sell below assessed value during the second half of each year.)

The Real Estate Cafe first began tracking sales below assessed value during the first quarter of 2006; and by September 7, 2006, our research was featured in a Boston Globe story entitled, "Priced below assessment."  Contrary to Redfin's assertion that "a house would have to be ravaged by fire" to sell below assessed value, a map in the Globe story revealed that 37% of the single family homes sold in Brookline were below assessed value, compared to 22% of the single family homes sold in Cambridge at the time.  (Click for sample of the homes selling below assessed value in Brookline in the past.)

Two years ago today, our first user added their own examples of falling house prices to our interactive real estate bubble map.  Inman News also featured our map in a mini-series on Real Estate 2.0 innovations, and we need your financial support to attend their real estate technology conference next week to continue our 15 year tradition of helping real estate consumers save money.

Preview of Part II:  Homes selling below assessed value has clearly become more commonplace, but what was newsworthy about the Globe's recent story is the magnitude of how far below assessed value:  During the first six months of 2008, two homes in Cambridge sold for approximately $2 million below their original asking price; and more significantly, more than $1 million below their assessed value (based on our analysis of MLS data.  Watch for more details this week.