Archive for the 'Current Issues in Real Estate' Category
This was initially meant for real estate professionals that run their own sites. But I am putting it out here on a public forum in case it is of interest to anyone casually stopping by. It certainly is a topic of great importance.
What if your web site suddenly slowed to a crawl – permanently? How loyal would your readers be?
Remember all the proxy errors we went through on Active Rain last year? Remember how it impacted your business and how your readership suffered? What if this sort of “slow lane” became permanent?
While the bloggers and tweets of the world have been sleepwalking, taking for granted that what they have will always be there, the big telecom companies have been poised to make a big power play that could spell the end of the ability for small businesses to compete with the big boys on line.
What have we been taking for granted you ask?
It can be summed up in two words: net neutrality. That’s what we have right now and we are taking for granted that it will always be there. the telecom companies have been plotting and planning. They want the END to net neutrality and the first nails are already in the coffin. They want to be able to charge for “preferential service” So those who have deep pockets get the fast lane – and since the bandwidth is finite – everyone else Sssssllllllllloooooooowwwwws down.
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A real estate colleague of mine from another geographic area recently wrote an article on private forum about a REALTOR all of us in the business are all too familiar with. He named her Ethyl Broomhandle and I would give this agent credit for his diatribe, but I have a feeling that he wanted his comments to remain anonymous.
We all know her.
The most obnoxious real estate agent that God ever created. Aggressive, nasty, mentions repeatedly that she has been in the business since the dawn of time. Agents cringe in horror when a buyer falls in love with one of her listings. I’ve written about her before on professional forums. In fact – a good chunk of my time with my real estate coach is spent talking about how to deal with the Ethyl Broomhandle’s of the real estate world without finding myself at the bottom of a bottle of Cabernet every night.
But through all of this, I never came clean. Well I have a confession to make… you see I created Ethyl…I did this 20 years ago when I was young and foolish. While the public was focused on the cloning of Dolly the cloned sheep – they didn’t know that a group of mad scientists – of which I was one – had created clones of thousands of “worst nightmare” real estate agents and deposited them in every brokerage across the continental US.
How did this happen?
You see – about 20 years ago when I was first starting out as a budding mad scientist – we were under a lot of stress. We decided that we deserved to have a “fun project” to lighten our burden. Then one night a couple of us got drunk while watching Star Trek reruns we got our inspiration from this episode: The clip gives you the conclusion…
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It’s been said that numbers don’t lie – or do they? I love statistics. Heck, I worked as a molecular biologist in mammalian genetics. I defy anyone to find a scientific discipline that is more reliant on solid statistical analysis than that!
But…. as anyone in the sciences will tell you – statistics are only as valid as the data they are measuring. I saw more than my share of deceptive creative uses of statistical models. In the science/engineering disciplines “peer review” holds these “creative types” accountable and by and large it does an excellent job. In fact this is often where the rubber meets the road for most of the junk popular pseudo-scientists who whine that they can’t get published.
Sadly – I haven’t run into the real estate watch-dog equivalent of peer review.
Phil Faranda wrote a blog about REALTOR stats being open to the public. He sighted a post from Agent Genius about how when the Houston Association of Realtors started disclosing these stats – agent protest caused the program to be discontinued.
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I know, I know, this sounds about as interesting as watching paint dry. it’s kind of like having fire insurance. The top BOOOORRRRRRING – until you have a fire and then its a topic of high interest.
Well….we have a fire!!
if you don’t find the topic interesting now – you will. Just as soon as the implications for your own web presence become apparent.
At this moment in time you can access anything on the internet with equal speed. All those big companies with their pockets stuffed full of VC can not do one thing: they can not control the speed with which your web site or theirs is accessed. In this way – we are all equal. My blog will load as fast as Trulia or Zillow.
BUT -what if that could change? What if the Trulia’s and Zillow’s and ALL of those wonderful indexed IDX companies could “buy” their way to the front of the line. Their sites snap up in the blink of an eye – while your site which has been carefully and lovingly nurtured can’t be opened or has been left in the slow lane because you couldn’t pay what they can.
What if your readers suddenly had trouble accessing your site?
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Attention condo/cooperative board members and management. I know that times are difficult and that units are not selling like they were. This is particularly true since the tax credit has just expired. Westchester condos and coops are often the first step on the ladder to home ownership – so complexes that have entry to mid-level prices will be impacted the most by the expiration of the first time home buyer’s tax credit. The inventory of condos for sale Westchester NY is very high.
But nothing is worse for values in your complex than a ton of listings just sitting on the MLS going nowhere. Ok – so how can you help move these units ….let me count the ways.
1. Don’t make getting through the front line-security something akin to the landing at Normandy. Security is great – requesting a card from the agent is fine, but make sure that the building is actually accessible including the amenities. After all the buyer is often buying the lifestyle associated with the complex. It does no good for me to say “Oh and you should SEE the gym!” When they can’t see the gym because it is locked and no one has an access key.
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Consumers who have been searching for homes have been discovering something new and different when they do an address search on Google. They are suddenly swamped with web pages which amount to “listing sheets” of each address the punch into the search engine. The result is the mess seen on the right. A long list of web pages for a single address.
At first this might seem like real estate heaven for buyers and sellers a like. However, the number of these sites have been propagating like bunnies and the elation turns to confusion when the consumer picks up the phone to call the agent who listed the home.
Where is the Listing Agent?
You see, these listings are being sponsored by agents and brokerages that for the most part have nothing to do with the listing. Some may have no idea about the listing whatsoever. They engaged a service that covers several counties, and know nothing about the home in question. In fact their working territory might be 30-50 miles away or more – but they are eager to help the buyer or seller with their real estate needs no matter how little they know about the area.
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Seriously, finding out the name and contact information of the actual listing agent of a property should not be an enigma wrapped in a mystery. But that’s what its becoming.
Sites like Zillow and Redfin are turning what should be a rather simple process into a monster of complexity. Finding the listing agent on an IDX site or a major real estate portal should be a piece of cake, no? Hardly. There is no way this isn’t creating confusion for the general public.
Large Portals Such as Zillow - Pay to Play:
You see all those wonderful portals such as Trulia and Zillow that agents happily used FOR FREE are now demanding pay back for all that free exposure. I have no problem with entities like Zillow monetizing. However, the way in which they are doing it marginalizes the listing agent unless they pony up the big bucks. If they don’t, those with fatter wallets get “credit” for the listing.
Zillow now happily puts the mug and contact information of any agent alongside their listing data as long as they cough up the dough. The implication to the public is that the agents listed have something to do with the listing. Most of the time, they have nothing to do with it whatsoever. They simply paid to be a “premier agent” or an area “specialist.” As I stated in my previous blog about “premier agents” and area “specialists” they often are nothing of the sort. Some have had no sales (either on the listing or sales end) in the geographic area that they supposedly specialize in. Where is the actual listing agent in all of this? At the bottom of the page. No photo, no contact information – tossed off as an obligatory afterthought.
Oh! Those Wonderfully “Creative” IDX Sites!
Then there are the uh….”creative IDX sites.”Although there are several IDX sites like this, but Redfin has the most Google support. They at least mention the listing agent underneath the photos. But once again, the actual listing agent is an obligatory afterthought. In their place is another agent’s mug and contact information associated with the listing.
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This post was influenced by two blogs that were recently posted on Active Rain. The first was Bob Haywood’s excellent post – How Did We Let This Happen??? Internet Real Estate Tough Talk . Although this blog was a members-only blog - it was about a mass email sent to agents from Zillow offering us all placement as a Zillow Premier Agent in the zip code of my choice. The only requirement was that I (and anyone else contacted) be willing to pay for the privilige. The second was Ron Tarvin’s blog Zillow named in a patent infringement lawsuit. (http://activerain.com/blogsview/1630729/zillow-named-in-patent-infringement-lawsuit) Unlike Bob’s post, this blog was public-facing. So the members of the public might want to stop by and see what agents across the country actually think of the Zillow “Zestimate” – for those who feel that a Zestimate is a fairly accurate indication of home value, this should prove illuminating.
Disclaimer – There is no love-loss between Zillow and me:
Those who have been reading my comment threads on various forums know that I have absolutely no love for Zillow whatsoever. I consider their forums poorly monitored, and their Zestimates to be pointless bordering on the unethical since any number that is often off by 20% or more that the public tends to implicitly trust has the capacity to cause harm.
The fact that the Zestimate itself is inherently inaccurate doesn’t bother Zillow one wit. Their canned responses in Ron Tarvin’s blog regarding the lawsuit is a strong indication of same. They know the Zestimates are often way off the mark. They know it causes confusion within the public. They know this has the capacity to harm a seller. They know that agents tear their hair over inaccurate Zestimates that cause the public to put lowball offers on their listings. But they don’t care, because it was never about providing transparent information to the pubic. It was – and is – all about the traffic. If it drives people to their site, they simply could care less. The question is why?
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There is an old saying that there are only two things you can count on in life – death and taxes. Apparently homeowners in Westchester now have a third thing they can count on – exponentially increasing property taxes. Homeowners in New York are up in arms over property taxes. For those who don’t know the region, New Yorkers enjoy just about the highest property tax rate in the country. Westchester has some of the highest taxes in the state – so you get the picture…..In many areas of Westchester, the taxes actually exceed assessed values.
White Plains NY is a case in point. Taxes have been marching to new heights each year. Year after year, the city, schools and county come with their hands out expecting homeowners already reeling from the worst recession since the Great Depression to fork over more in property taxes. Many are hanging onto their homes by their fingernails. And as more and more homeowners feel the squeeze – many will find they can no longer afford to stay in a community that just a few short years ago was quite reasonable and affordable.
Traditionally, White Plains enjoyed significantly lower property taxes then the rest of the county thanks mostly to our large commercial and retail base. But even though that base has increased, the number successful certioari actions has also increased. The net result has been a shrinking tax base in the commercial/retail sector pushing the lions share of the burden onto homeowners. Most notably: owners of single family homes.
Homeowners and city officials in White Plains need look no further than Sleepy Hollow to see what happens to home prices when the homeowners are saddled with an ever more onerous tax burden. This burgeoning problem needs to be nipped in the bud or home values could well suffer.
I chose Sleepy Hollow for a comparison because it is an analogous community in many ways to White Plains. Although city officials and union leaders prefer to liken White Plains to Scarsdale and Larchmont where high taxes are better tolerated, our community profile is in truth more like that of Sleepy Hollow. The commute to Manhattan is similar the two neighborhoods I chose to focus in are are quite comparable in terms of home size, amenities and lifestyle.
Gedney Farms is an established upscale neighborhood in White Plains. Over the past ear the average sales price in Gedney was $993,000 – just shy of $1 million dollars. The average tax bite in these sold home was slightly more than $16,000 per year.
Philipse Manor in Sleepy Hollow is quite similar in many ways to Gedney Farms. However, Sleepy Hollow is a village with relatively little commercial activity resulting in a higher tax burden on the homeowner. Over the past year the average sales price in Philipse Manor was $847,000 – a significant 15% drop from the prices enjoyed by Gedney residents. That’s a difference of $147,000 – not exactly chump change. When you look at the tax bite that Sleepy Hollow extracts from Manor residents, one can see why. Its enough to make your head spin. The average tax on the homes sold that year was a crushing $22,500 or 29% higher than what is seen in White Plains.
Does the tax rate account for the price difference? Uh….ya think? Think of it this way….taxes that high are like another mortgage payment. For Gedney residents its about $1333.00 a month, but that goes up almost $550 a month for Sleepy Hollow residents. Assuming a 6% mortgage rate (assuming they have enough cash to not need a jumbo loan) that translates to a drop of over $90,000 in buying power. If you don’t believe me – the charts below tell the story.
City, county and school officials take note. I know you have turned a deaf ear to the voters on this issue for many a year. Your special interest groups have drowned out the silent majority. But now you are looking off the cliff and into the abyss. Single-family home values could easily implode. Here is the scenario that I fear the most.
Raising the taxes the proposed 19% will make homes in surrounding areas such as Scarsdale, Larchmont, & Rye – more attractive to buyers. Many single family home buyers preferred these areas over White Plains, but high home values put them out of reach. Now that home prices have declined and taxes in White Plains have risen, the trend has been towards these higher-end areas and away from White Plains. Fewer buyers means lower prices.
As taxes rise, those who were hoping to retire (or simply age) “in place” will realize that this is no longer possible. The increase in taxes will be just that extra shove off the cliff that will force many homeowner’s hands. They will have to sell in a bad market. This will push additional inventory onto an already weak market. More homes for sale = more downward pressure on home values.
Further, as home values decline, more homeowners will be able to successfully grieve their taxes. Thereby further eroding the tax base. And the merry-go-round keeps going round and round.
In the past, home owners were just giant money cows to be squeezed to the heart’s content of public officials, educators and unions. But declining home prices translates into lower property values and lower assessed values – and that should put the fear of God into you. The message is loud and clear! Keep hiking taxes and you erode home values AND your tax base.
Further Reading:
Certioraris a Taxing Situation for New York Homeowners
© 2010 Ruthmarie Hicks, http://thewestchesterview.com. All rights reserved.
The title pretty much says it all – but I should add the caveat that agents embrace social Darwinism when the herd being thinned does not include THEM.
Before continuing further – full disclosure here – I am a full-time agent. I do sometimes work as an adjunct professor of biology/natural sciences. But such work is very part-time and more because I enjoy it than for income. (I’d be in a ton of trouble if I relied on teaching for income.)
There have been several recent blogs about the war between part-time and full time agents. It kind of reminds me of the war between stay-at-home vs. working moms of the 1980s. Each camp is armed and dangerous – and with fewer sales to go around – the goal is the extinction of competition that they feel is squeezing their ability close enough sales in order to survive. It’s kill or be killed so the waring parties are in opposite fox holes exchanging fire.
I don’t know what it was like before. I came into this industry at the tail end of the boom. Productivity was already heading well south and new agents were hated beyond belief. When I walked into my first brokerage – bright-eyed and bushy tailed – I was greeted with a mixture of out and out hostility and anger combined with smug amusement. Skirmishes between the long-term full-timers and part-timers were common. Over the next few years this escalated to out and out warfare.
“Part-timers are better because they aren’t so pressed to make a sale…There is nothing worse than desperate agent breath!” Major artillary
“Full-timers are available 24/7/365 – a part-time agent means part-time service and a lack of dedication. “ Saturation bombing.
Blah, blah, blah!
Two recent articles by Bernice Ross showed me just how explosive this issue has become. The articles – Crackdown on independent contractors and 8 reasons we need independent contractors, and were actually about the potential loss of the independent contractor status for most agents. But the comment stream led me to realize that in war of the part-timers vs. the full-timers we are at DEFCON 2 and the leaders on either side of the argument are ready insert the brass keys and launch their ICBMs. Rather than looking hard at the issue itself – many chose to view it through the lens of “how can this work to thin the herd.”
Some of the comments included:
” Elimination would allow brokerages to run themselves as real businesses. Training, coaching, team work, company and individual goals and on and on. Such a breath of fresh air.
“The agents who sell one or two houses a year would be gone leaving more for the agents who take this business seriously.”
“If 50% of the agent’s left the field, it would probably be the agent’s who are not committed to being in real estate.”
“If it curtails or eliminates the part time agents it could not be a bad thing. They cannot answer their phone or return calls while mixing paint or selling merchandise. Many are not being fair to their agency, peers, or clients.”
“There are way too many non-professional and part-time agents in this business…. It is time to professionalize this business and hire agents with years of experience and industry knowledge, who have taken the time to get their CRS, their GRI, and many other real estate designations.”
“Memo to Bernice: It’s 2010 and the real estate buying public is one hell of a lot smarter than the average Realtor slug! Improvise, adapt and overcome or go the way of the Fuller Brush Man!”
Note that the article wasn’t even ABOUT part-time agents…Also note that the responses rather CONVENIENTLY cast the surviving agent’s mold in the image of the poster.
To me it comes down to professionalism. I’ve met some very professional and attentive part-timers and some real laggards that were supposedly full-time. Do we need to raise the bar? Absolutely. I think demanding an apprentice period along with a more intensive course of study is in order – perhaps even a two-year degree. That would get rid of dabblers trying to turn a quick buck. But I draw a line of distinction between part-timers and dabblers.
© Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.
