What we saw and what he saw. The Jobs Difference.

We saw an IBM PC and he saw a Mac.

We saw a Sony WalkMan and he saw an iPod.

We saw a Motorola Flip Phone he saw an iPhone.

We saw a smaller PC he saw an iPad.

What do you see now?  What would he have seen?  That's the difference between what's now and what's next.  That's what Steve Jobs did, what he stood for each and every day and it is what someone else will need to do now.

Make it you.

This example is really all about your future.  What do you see that could be something better as different?  Have the courage and just go for it. 

Be next.  Do it now.

You will be missed . . .

In Times of Change.

Sometimes it is the simplest of messages that have the most meaning.  Here is one I live by always and it has to do with the only constant I know in business - and it has to do with change.

In times of change - it might a good time to change.

As I look around the real estate brokerage industry, the mortgage industry and nearly every other part of the residential real estate business I find an astonishing and amazing lack of change.

The MLS? Still here and still the single most ineffective and inefficient business model of modern times.

The real estate franchise industry?  A model that was built on the ability for franchises to generate consumer traffic for real estate brokers that has been broken for years and in denial about the value of a brand.

The NAR?  A professional association that is fixated on doing business in residential real estate.  An incredible story of an intoxication with meddling in the broker's business that seemingly has no boundaries.

Others?

I don't know about you but change - and lots of it - always presents the most effective opportunity to achieve a competitive advantage to shift share of market.

Grab it, try something new and run to the finish line.  And in real estate, by the time you reach that finish line - based on the current rate of change in this industry - it is highly likely that you won't even by winded.

On your mark, get set, change.

    
     

More Than Just Another "Hyper-local Dream"

Just sharing an amazing story today of American free enterprise success from the New York Times today.

__________________

DealBook

In a Twist, Google Reviews Zagat, and Decides to Bite

By MICHAEL J. DE LA MERCED, RON LIEBER and CLAIRE CAIN MILLER

The deal for the company behind the "highly popular" guides to restaurants and bars will make Zagat a cornerstone of Google's local content offerings.

__________________

It is always refreshing to see more than thirty years of work pay-off and for the Zagat’s that dream has now come true.

In times when all the noise is about hyper-local everything and the value of that content is being assumed more than realized - there still is a lot of work to be done to actually secure hyper-local content about anything of value.

Zagat.  So very hyper-local that the need to say they were hyper-local - the need for the mention of the "buzz of hyper-local" -  didn't even enter into the news release - or likely even into the minds of Google!

The Zagat’s deployed a systematic and consistent approach way before hyper-local was even known or understood.  The rating effort they created surpassed even those that came before them at Mobile and AAA - and oh yes, even Yelp - and surpassed their collective ability to gather and authenticate meaningful opinions and ratings for restaurants, airlines and essentially anything.

Oh for the value of a validating Zagat sticker on the door, in a book and a good old fashioned plaque on the wall.  Just in case of course, you forgot to check your smart phone.

The Zagat’s are now in their early 70”s and they created something so attractive to 30’s something Larry Page and Sergey Brin that they paid $100 to 200MM for it.  

Sometimes doing things the old fashioned way even has promise and reward.  In a day and age of everything quick, fast and everything simply electronically mystical – this story is in so many ways - so refreshing.

Good for you Mr. and Mrs. Zagat!  Go directly to the bank, cause you have way passed Go.
 

A Jobs Well Done

With all the news related to Steve Jobs' resignation as the CEO of Apple, I had some thoughts.

It is the brand that makes the people or the people that make the brand?  Further, is it people or a person that makes a brand?

Could it be that the most valuable company in the Nation has been made by a single person?  Or was it more?

I once thought it was more, but recently I have changed my mind.  I think a brand without visible leadership is a name.  I compare Apple to American Airlines.  A clear leader versus what I consider to be a blur of lots of people making things happen.

Yes, Apple has lots of people too, but when I think of product, innovation, quality I think of Jobs and not the guy at the local Apple Store.

TECHNOLOGY

Steve Jobs Reshaped Industries

By DAVID POGUE

It's hard to imagine that we'll ever see another 15 years of blockbuster, culture-changing hits like the iMac, iPod, iPhone and iPad - from Apple or anyone else.

Somehow Apple was able to almost reincarnate Jobs' in each and every one of its employees.  An amazing feat if you think about it.  Each and every person I have interacted with at an Apple store seems to me to be a person that doesn't exist any where else in retail sales.  It's almost like Apple flew this massive group of aliens to Earth to serve mere consumers. 

Everyone one of them little Steve Jobs' clones walking around being Apple.  Not one of two of them - every one of them.

With all the debate about Apple's future success or failure without Jobs at the helm, if the new guy is able to embrace and fill the shoes of a very bold and cocky visionary who accepted nothing less than "follow this leader" the company will soar.

On the other hand if the company falls into the stale mold of a typical corporate structure of a constantly blurred vision governed by committee management Apple will eventually die a horrible death at the hands of another company with a strong, determined and focused leader.

So the conclusion I have made here?

Go out there and be passionate you.  Create a unique and different brand - starting with you and extending to many others.  Dump all the conventional wisdom and traditional thinking and kick it right out of current game into a new one!

Use Steve Jobs' legacy as an example, not as an exception. 

The best news is that it pays off in many ways and most importantly, it usually results in the creation of a more purposeful life.

And as for how this relates to reFreshing residential real estate?  We'll talk about that later.

Much More than Just a "Jobs"

I could not let one day go by without making mention of the departure of Steve Jobs from Apple.

It seems like only yesterday when a dark haired, energetic young man stood next to a cloaked box and then in a flash of fanfare revealed the NeXT computer.  Not as an Apple legend, but as a fired employee of Apple starting something new.

Then fast forward to yesterday's news and today's stories in the news.  In this case, in the New York Times.

TOP NEWS

Jobs Steps Down at Apple, Saying He Can't Meet Duties

By DAVID STREITFELD

Steven P. Jobs, who has cancer, made Apple one of the world's most valuable companies. Timothy D. Cook will take over as chief executive.

Steve Jobs the iconic leader of Apple without even so much as one mention of the failed NeXT venture.

I cannot recall a more incredible story of one man building a dream that was shared by so many and has literally changed so many ways we think and do things.  From taking the PC to the era of MAC, from the amazing Walkman to the astonishing iPod, from the Motorola flip phone to the incredible iPhone, and from the understanding of the value of portable technology evolved the game-changing iPad.

One man, many dreams and one determined focus.  He made dreams come true.  He produced what we all wanted.  He had little care for what others thought about him or his ideas.  He only imagined what the consumer would want, doubled that vision in terms of functionality and flexibility and simply delivered it.

More than all the devices, more than the value of the Apple company and more than the all fame and fortune I have to think this guy is simply extremely pleased with all he has accomplished thus far in his life.

Something I think we all could learn from in business - and in our lives.

You might have stepped down because you didn't believe you could meet your duties Steve but in my book - and in the rest of the world's book - you have far exceeded your duties and you are more than deserving of some time off.

Making More Waves

It seems everyday I read and hear more and more noise about the success or failure of RPR and other NAR-associated business ventures.

Here is the most recent comment submitted by Marilyn at the WAV Group.

http://waves.wavgroup.com/2011/08/22/rpr-the-solution-isnt-difficult/

When is NAR and the MLS industry going to get it?  It's not about whether or not the MLS is willing to measure and accept these offerings it is only about whether the broker will.

In the end and all compiled database noise aside, it is the broker's data and it is only the broker that should be considered in any value proposition or compensation for the data.

And oh yes, one more thing.  Despite the outdated structure and practices of the MLS's implied opt-out for everything, the broker needs to opt-in - not opt-out- of any data moving from the MLS database to a free enterprise venture.

That includes those ventures that are owned and operated by the NAR,  In fact, on second thought, that especially includes those entities.

If the NAR was more focused on being a true non-profit professional association rather than a profit-focused cash machine usually at the expense of the brokers, then much of this wouldn't be rich content for blogs such as this one.

Wait,  I have an idea. 

Why doesn't RPR pay for the enhanced showcase listing ads for the brokers on REALTOR.com in return for the right to use the broker's listing and sold data?  Then at least the consumer would be able to associate the NAR and all REALTORs with more than the need for the consumer to use the telephone to connect with a REALTOR on REALTOR.com.

Hey, it's a start.  At least the brokers would get something for the use of their data.  After all, I know of no MLS who is suggesting that a share of the revenue be made to the broker.

Overall, for the NAR / RPR to continue to make offers to compensate the MLS industry for assets they do not own is simply ludicrous.

As for the optimal fix for the problem.  Get out of the business of real estate NAR - its not really serving you well.

Move closed today at $1.41while Zillow held strong at $24.48.  There's a loud and clear message from Wall Street to be learned from here.

Is anyone really listening out there?

Revenge Can Be Sweet - But Painful.

TOP NEWS

U.S. Inquiry Eyes S.&P. Ratings of Mortgages

By LOUISE STORY

The Justice Department is investigating whether Standard & Poor's rated mortgage securities improperly leading up to the financial crisis.

_____________________________________________________

Really.

What a surprise.

The U. S. Government has protected so many of the past indiscretions of S&P that it’s hard to count them all.  Until of course S&P recently took on the federal government and appropriately downgraded its credit rating.

Oops!

It’s not nice to fool with the U. S. Government!

Take a look on YouTube at the documentary called Inside Job.  It’s all explained very clearly there.

It’s a shame that it took an act of pure revenge on the part of the Obama administration to surface the obvious wrong-doings of a credit rating agency that ultimately caused a major part of the economic meltdown in this Country five years ago.

Better late than never?  To tell you the truth, I really don’t know any more.

See it. Be it. Share it.

TECHNOLOGY

Briefly, Apple Reigns as the Most Valuable Company

By NICK BILTON

Apple surpassed Exxon Mobil as the stock markets' most valuable company, although Exxon finished the day in the lead.

____________________________________

Innovation, imagination, simplicity, leadership, a bit of craziness = immense success.  Even in times of a very troubled world economy and everything else that could be bad – and is.

When I worked directly with John Sculley in the late ‘90’s he often commented privately to me on what he thought of Steve Jobs.  He greatly admired his leadership style and his ability to help others see his vision for the future of Apple.  That caused immense creative execution in the production of Apple products and its people and that was utlimately translated into high-voltage electricity that was aimed directly at the end consumer.

Ironically, it was Apple CEO Sculley that desinged and produced the Newton while at Apple – essentially the first tablet / smart device – in the ‘80’s – that miserably failed. 

 

What was lacking? 

He said not “something created before its time”, he said what the Newton lacked was product leadership – a strong vision and the realization of a dream that Jobs possessed as the former CEO and most of all he possessed as an end consumer.  And Sculley – admittedly - did not have that juice.

Something to learn from here.

No.  A lot to learn from here.

See it. Be it.  Share it. 

This is my new motto in business and in all things new and especially in all things product development.

Meanwhile back at REALTOR.com . . . . .

I recently attended an MLS industry conference in Houston.

Throughout the program I heard repeated references to how "we" the industry have lost control of the online business of real estate. 

I heard among other online media attacks, about how terrible Zillow was for going public and how awful Trulia was for charging brokers and agent for premium advertising.  And as expected, at every REALTOR-related event or sponsored event, I heard how wonderful REALTOR.com is as a service to the industry.  All provided through its relationship with Move, Inc. and created by "the trusted and good NAR" for all REALTORS. 

After all if it were not for the NAR what other awful things would we be exposed to in this industry?  You know, those companies that steal REALTOR value and charge for their services.

In one word I say, and have always said, bunk.

As I listened, I thought how bold.  How brash.  No, simply how REALTOR.com. 

Almost since day one, the leadership of REALTOR.com has based its value on the ability to denigrate its competition.  I call this the "online Lion coming over the hill" extension of the declaration made by Bill Chee.

From the leadership of Wolff to Long to Samuelson we have all heard the same old rethoric and fear mongering lines.  From interlopers, to carpet baggers to whatever other condescending comment, it has been the same strategy - divert attention from what REALTOR.com isn't doing and should as the strategic partner of the "trusted and good NAR".

In one word, enough.

How bold to bash Trulia and Zillow and others for something that has already been done by REALTOR.com - gone public - and what is done everyday - charge for advertising to get basic functionality that others provide for free!

In another word, weak.

For all those that feel going public with a real estate related media company is wrong.  How many shares of Homestore were you given as a REALTOR by your "trusted and good NAR" when that company went public?  Not once, but twice.

In yet another word, misguided.

So let's look at the value REALTOR.com brings to the brokerage industry.  Since I attended that conference in Houston, I witnessed a REALTOR.com sales presentation and learned a lot.  I learned that the supposed "free" value delivered by our "trusted and good NAR" and REALTOR.com was a listing displayed with limited photos and a phone number as the only means for contacting the listing broker / agent in the local market.  I also learned the redirectiuon of consumer traffic, a means to get consumers back to the listing broker's site, was really not a core objective of REALTOR.com.

In another word, really.

To save time, this is for one reason and one reason only.  Holding the consumer hostage.  The ad model on REALTOR.com demands page views and if the consumer traffic is sent to the broker's site those views are lost and cannot be monetized by REALTOR.com.  So for the sake of the public company Move, Inc. to make money off of REALTOR.com, the consumer is held captive on an industry site and absent a root canal experience of using the phone, cannot link to the local broker to buy a home.

In one word, twisted.

I get it though, I really do.  The REALTORS suffer through a poor consumer experience on REALTOR.com so that Move, Inc. can make money off of the brokers and other advertisers to boost its value on Wall Street.

In another word, interesting.

Speaking of public companies and the measurement of value and the winner is?

Zillow.

Zillow's IPO this week produced a valuation of just over $800 million.  Trading at this moment at over $34.00 per share. 

And meanwhile back at REALTOR.com and as for Move, Inc.?  A valuation of a $350 million and a share price of just over $2.00.

And as for the last one word for today a big, oops.

In summary of these "words" and as for my on-going opinion of REALTOR.com; bunk, enough, weak, misguided, really, twisted, interesting and lastly, oops!

A Game Changer

Simply stated . . . forget a reFresh - this has all the makings for a true potential game changer.

Few revelations in this industry are ever actually realized or even discovered yet alone really happen.

This one did.  It took six months to soak in - but it has happened.

The permitted use of nationwide IDX listing data by the NAR in search by franchisors may just be one of those realizations that provides the catalyst for true and disruptive change.

Who ever thought Yahoo could be taken over by Google?  Or maybe now even Google trumped by Facebook?

In the case of the NAR, when you get so big that you think you're infallible and you stop being paranoid, stuff just tends to happen.

Today a "request" - tomorrow a "demand"?  I think so.

Read on courtesy of this excerpt from Inman News reported late yesterday afternoon.

NAR asked to repeal franchisor IDX indexing policy
The Realty Alliance warns of potential liability, lawsuits
By Matt Carter

The Realty Alliance, a network of 60 real estate companies whose members include HomeServices of America Inc., is urging the National Association of Realtors to repeal a policy that allows national franchisors to index property listings displayed on their affiliated brokers' websites.

NAR's board of directors approved the new policy -- which greatly expands the pool of listings national franchisors are able to display on their consumer-facing websites -- at the group's annual meeting in November.

... More »

The NAR Redefines RSS

There they go again. 

Will we ever see the end of the constant meddling of the NAR in the business of real estate brokerage?

Check out this latest one.

Report and Recommendations

of the

IDX Data Use Work Group

of the

Multiple Listing Issues and Policies Committee

March 2011

This time the NAR has literally redefined the true meaning of RSS.  From that of "really simple syndication" to now mean, in terms of a newly revised IDX policy, "really stupid solution".

There are some things that would take just way too long to discuss even in a blog - and this may be one of those "things".

Suffice it to say that I believe the NAR and MLS should never meet nor intersect in business. 

One is supposed to be a professional association and the other SHOULD BE a utility designed for the effective management of real estate data on behalf of the BROKER.

The use of the data and the permitted use of the data should ONLY be determined by the owner of the data - the BROKERS.  Not the NAR, not the State Association, not the local Board and not the MLS.

It is the listing broker that is fully liable and responsible for the display and use of the listing information contained in the MLS - and it is each listing broker's decision what happens with their listing and sold information - period.

For a select group on an NAR committee to decide and rule on such business critical matters is simply ludicrous.

Unfortunately, after years of measures and legal cases that have been intended to separate organized real estate at the national, state and local levels from the data management utility the MLS - the NAR still feels compelled to architect and evolve the rules, policies and regulations of the MLS industry.

Maybe someday the Brokers in this industry will realize that this addiction to the power demonstrated by the NAR over data decisioning needs to be treated with immediate, let's say - intervention and rehab.

How much damage needs to be inflicted before maybe, just maybe it's time?

Flipping Unbelievable

TECHNOLOGY

For Flip Video Camera, Four Years From Hot Start-Up to Obsolete

By SAM GROBART and EVELYN M. RUSLI

The camera had been a great hardware start-up success, but it lost traction as the smartphone came on the scene.

I never thought I would read this headline in the New York Times. But there it was this week.  The unfortunate and gradual death of the ever popular Flip Video Camera because it's obsolete?

The Flip video camera that had been a truly great hardware start-up success, lost huge traction with the consumer as the smart phone came on the scene.

Ouch!  All this just as the use of video online surges to unbelievable levels of adoption.

Everything technology seems to come and then as quickly go if it is not eventually integrated and constantly enhanced.

In this case a micro video camera that stayed a micro video camera lost out the a more integrated consumer device – the smart phone. 

Too bad the Flip camera wasn't chosen to be the video part of the iPhone.

OK.  So why then has the integrated Garmin phone failed as well?  You know, the GPS device with a phone added on.  That's integration, yes?

Not really.

Garmin's attempt at creating a smart phone is an example of when a sum of the parts is worth less than the whole.  Apple and others were capable of creating amazing integrated personal handheld devices that “did the job” and were fully integrated.  Like the Flip video camera, the Garmin GPS functionality was not unique enough to be chosen by Apple to power the iPhone and others.  

I liken what Garmin tried to do to simply duct taping a phone to a Garmin GPS device.  Not so. 

Integration like this doesn’t really pass the test of the consumer.  And that brings me to a similar parallel in real estate.  Namely, the real estate transaction. 

Why is it that today a real estate transaction looks a lot like a fully disassembled airplane?  A bunch of parts that if you can figure out how to assemble them, could become an airplane and might even fly.

More importantly, why is the consumer in most cases left to piece the transaction together?

Somehow we think that the consumer enjoys assembling the transaction on their own while at the same the REALTOR association professes the REALTOR to be the center - the hub - of the transaction. 

Where’s the integration?  The streamlined experience that is predictable, a reliable process that is a standard that is duplicated in every transaction?

For as long as I have been in this business – all 32 years – I have doubted the wisdom of having 1.2 million ways to do deliver the services associated with the real estate transaction.  A unique way for each agent in the business. 

How can that be good for the consumer? 

Most of what we deliver today is one part of the transaction literally “duct taped” to another.  And the worst thing is that most of the transaction is organized poorly to avoid consumer frustration and stress.

If we were like the airplane example, the real estate transaction has integrated the engines inside the fuselage, the flight deck in the tail and the landing gear installed most times backwards.

My opinion? 

The days of sustaining an industry on 1.2 million different ways of delivering disintegrated real estate services are over.  The challenge?  Figuring this out as an industry before someone else does and offers the integrated services alternative. 

It is about the effective management of the data, it is about the relevance of a company and its products in search, it is about having good people, it is about creating a brand that stands for something real and at the center of all this IS the organization of the transactional process.

A basic standardized business process is needed for the integration of services in a transaction in an orderly, logical process  - delivered by 1.2 million very personal, each unique and creative customer service experts.

The only question is who will be the "Smart phone of real estate" to emerge and reengineer the real estate transactional process and order?  To create the new standard of delivering services to consumers?

Maybe it's you?

On your mark, get set, remove the duct tape  . . . .  and integrate.

A Matter of Life and . . .

One of the most disturbing headlines that I have read this year was this one.

REALTORS® re-examine safety policies after shooting

As I read the details of the danger and the resulting loss of life that recently occurred in Iowa I cannot believe that our industry has not reFreshed its policies for exposing properties to the public.

This should have been done years ago.

In contrast, other industries have established firm and logical policies that deal with providing open access to valued things to the public.

Here in Newport Beach, more than 5 years ago, an automobile salesperson took a stranger for a test drive in an expensive sedan.  As the salesperson walked around the vehicle to exchange places with the stranger on the test drive, the stranger locked the doors and took off with the car.  Never to be seen again.

Fortunately the loss was only the car and there was no loss of life but point made.

Since that time, the dealer has mandated a policy that all those that want a test drive must first surrender their driver's license and the dealer makes a copy BEFORE the test drive.

For years, millions of open houses have been conducted in our business offering literally unlimited access to personal property with little or no supervision.  In addition, millions of showings have occurred whereby unescorted agents have arranged to meet total strangers at properties.  Not to mention the millions of times that an agent has previewed a vacant property with no idea of who or what they might find "lurking in the wings".

So what should we do?

I think it is way past the time for our industry to turn up the heat on the security practices involved in everything we do that faces the public.

Here's a short list that I hope causes someone out there to rethink and refresh their current showing and open house policies.

• No solo showings of any kind are permitted at anytime
• Consumers must show their ID and meet at the office to see a property
• All open house guests must register and show an ID
• No solo listing presentations are permitted at anytime 

I know, I can hear it now. 

But Ken!  It would be impossible to enforce these type of policies!  We might lose the opportunity to sell a home, we might turn away an open house visitor, it would be a real problem having two agents at every listing presentation and no one is going to present their ID to see real estate!

Really.

If you stop and think about it in most cases when you ask for permission to fly on an airline, use your credit card for a purchase, or even get into a favorite  night club you are required to show an ID.  If you really want to do any of these things you gladly surrender your ID - mostly because without doing so you don't get what you want.

Forgotten or unpracticed security measures in any business have direct consequences.  In the case of real estate the consequences involve much more than taking a flight, making a purchase or having a night on the town - they are literally a matter of life and death.

So you decide.  Or better yet before another tragic incident like the one that occurred recently in Iowa - if you can't - someone else should.

A Sign of the Times

These days achieving home ownership is no easy objective to accomplish.

In fact no thanks to many variables in today's resale real estate and financial markets - it is nearly impossible.

The process is vastly complicated by wild price fluctuations, a market flooded with distressed properties, tight restrictions to qualify for funding and the need to considerable down payments just to get into the game.

The other day I was leaving a local restaurant and I saw this sign in front of a vacant home owned by a developer. 

Say hello to what I now call in this real estate market - the sign of the times.

I am becoming more convinced than ever that for the near term the residential real estate market needs to more flexible.  Everything for sale almost needs to be for lease as well.

Why?

Opens up the market to more options - buyers and potential tenants.  Allows the Seller to buy some time for the market to recover.  Gives the consumer an option and more flexibility.  Makes qualifying someone to move in a lot easier.  Stops the outflow of cash.  And these days, the after tax cost of leasing versus buying could well be a wash.

If there was ever a doubt why do you think that Trulia, Zillow, RealtyTrac and others online started offering rental listings for display to consumers?  Do they know something about the consumer's demands that we don't?  The answer is yes they do.  They listen closer to the consumer than we do and they reacted to fulfill a new expressed need - basically months and months ago. 

Face it folks.  Rent versus buy comparisons are a reality in this market.

But hey, what about my lost commission income on a lease versus a purchase transaction?

It's not lost money. 

If you do a good job for the Seller and provide an interim solution your opportunity to sell the property is nothing more than deferred for a year or so when the lease expires. 

But do beware.

If you do nothing now and try to market a listing without success, it will assuredly be lost money when the listing expires and the Seller terminates you - that is guaranteed.

Crazy times like these call for crazy solutions.  Added flexibility and creativity may be different than what the masses are doing but what's wrong with that?

Think about it.

Since when has anyone made anything worthwhile out of applying traditional thinking and conventional wisdom to anything? 

Go open up a new conversation with your Sellers today.  Explore the options and please do something other than just pound on them for yet another price reduction.  

Today's Sellers are more confused than ever - and they need your help more than ever to solve problems with flexible solutions.

Turn an obvious sign of the times into a unique marketing offering now and build your book of business for the future.

Last Things First 3

In this industry we always seem to love to fear something. 

Well now there are real issues that we really should fear - they are the potential "invisible monsters" that could well be hiding under the bed of every home in America.

We here about these issues affecting unknowing people every year and shutter at the thought of those poor people actually being us.  We read about the devastating results of what happens to people because these issues exist.  We see amazing footage of the destruction caused by these issues on TV.  And we all have heard about how we should fear those things we can't see that could have a major impact on our health and well-being.

And now for the good and the bad news. 

The good news - there are ways to find out about these issues and the bad news - there are ways to find out about these issues.

I am speaking of natural hazards and environmental issues that could exist around and under the improvements that have been built on the real property.  The dirt and immediate environment and all that could happen to it over time in special circumstances.

More than just freak incidences of nature these are real issues that have been mapped, recorded and logged publicly.

These issues are in the air, in the dirt, related to a specific location, regional, in the water and generally are realized only when they become the cause of something very bad. 

And by that time - it's too late. 

In real estate we have chosen now to deal with these issues last - why I'm not sure.  Or worse yet, not to deal with them at all.

Remember this classic statement?  It's the things that you can't see that will hurt you.

Well in this case - that is very true.

In a real estate industry that is obsessed with "physical inspections" and "tours of properties" we have done a very poor job of providing any detail related to a property that we can't inspect or see early in the transaction.  The invisible things that Sellers, Buyers, brokers, agents, appraisers and even inspectors can't see, but are known to others today.

I think unfortunately most real estate professionals really believe, "out of sight, literally means out of mind". 

So what do these things - these issues - potentially include?  Here's a short list:

• ground water contamination
• soils contamination
• vapor intrusion
• flood plain areas
• leaking storage tanks
• existence of drug labs
• fire danger areas
• proximity to earthquake faults
• areas prone to landslides
• and more

Ouch!

It is very unfortunate that we as an industry we wait for some governmental agency to suggest we disclose these types of dangers in a real estate transaction.  And it is even more tragic that when we do it at all it is only done in some States and usually as a last step in the transaction at the closing table.

Look again at the list above and imagine a portion of that critical information about the property buried in the stack of paperwork at the closing office - or worse yet, not disclosed at all.

Then there's this matter how this all relates to our industry's answer to declarating a property to be "green".

In short, it doesn't.

How in the world can we make any such a determination if something is truly "green" if we are unaware of just these types of environmental issues?  Leave it to the NAR to have the solution to the problem.

Declare that what the consumer really needs is a "green REALTOR".  Yes, you heard it right, a green certified person to evaluate a property and declare it "green". 

Right.

No surprise, no where in that program is anything about bringing the disclosure of relevant environmental issues - putting these last things first - in such an evaluation. 

In my book the importance of a property having low flush toilets, an EneryStar water heater, and double pane windows takes a back seat to knowing if it is sitting on a Superfund site, an area that is subject to landslides or an earthquake fault.

After all, few REALTORs I know want to be the bearer of potential bad news that could kill the deal.  The discovery of the existence of a Superfund site near a home I'm about to buy?  A definite deal killer.

But maybe once again I'm guilty of being just way too consumer-centric.   

You know there is an awful lot of "noise" in this business about quality service and the measurement of service.  The lingering question I have is when are we going to begin to speak to the question of providing a new standard of consumer care as a meaningful part of delivering a higher quality real estate services?  That's very different than delivery good service.

It's what you do as a services provider versus how you do it. 

In this case it's the transparency and information that we provide that isn't forced on us that creates a new level of care that leaves no consumer unaware and exposed to these issues.

I don't know about you but combined with the professional appraisal and the professional inspection the need for a full understanding of the environmental and natural hazards associated with a property is definitely not an option.

Come on all you real estate professionals out there - refresh your transactions and think about the impact of these real issues and consider making them something you surface first rather than last in your next transaction.

If for no other reason than it is simply a matter of "life and health".

Six Blogs to Separation

Well it happened.

And congratulations might be in order.  Six or so blogs later - I have evidently been successful at breaking through the “real estate curtain of no change”.

One or more of my large group of friends on Facebook has determined that my blogs are too abusive and as a result have asked Facebook - the supposed open platform that supports the socialization of all content - to block me from posting a link.

From Facebook to my blog today:

You're seeing this error message because the content that you've attempted to post on the site has been reported as abusive by other Facebook users. You should be able to edit your account if you do not include the offending text or URLs.

If you believe there is no abusive content on the specific website you are trying to post, unfortunately, the web domain that hosts the website has already been identified as abusive. Facebook does not have control over content that is hosted by particular web domains. To request the removal of abusive web pages that may be hosted by this domain, you will have to contact the specific domain provider.

Oops!

Offended friends aside.

Your comments are always welcomed.  And the debate is forever encouraged.

Onward!

Last Things First 2

So the last time we talked about moving one of the last things in a real estate transaction to first - the property appraisal prepared by the licensed appraiser.

Why?

To avoid the inevitable renegotiation of the sales price after the appraisal is completed by assuring that the true value of the property as it is related to the bank is exposed to the Buyer and the Seller much earlier in the transactional process.

Today we will explore the next most common cause for renegotiation of the transaction.  The home inspection conducted by a licensed home inspector.

Every prudent real estate professional completes a Seller's Disclosure form at the time of the listing.  You know the one that has the Seller state that they have not done anything to the property that was not without a permit and that the Seller knows of no defects in the property.  That is all well and good but that does not remove the pain of discovering things not known to either the Buyer or the Seller at the time an offer is negotiated.

So what do we commonly do now as it relates to property inspections?  We do them last.  After the offer is made and negotiated and we treat them as  a buyer contingency.  Once again, we suffer through a painful "root canal" process of settling on a final sales price just in time for the home inspection to upset the fragile balance of the transaction yet once again.

Huge mistake.

The property inspection needs to be first, not last in the transaction.

Sellers that do not have a licensed property inspection ask for nothing but trouble and after an offer is negotiated. 

AKA - huge headaches. 

Despite what is disclosed on the Seller's Disclosure form, very few Sellers truly know the condition of their property especially after living in their home for years and years.  Stuff happens and things age.  These conditions will always become the topic of discussion in any property inspection report and they will always be associated with an estimated cost to remedy.

This will always trigger a renegotiation of the sales price - always.

Don't get me wrong.  Just because a Seller does an inspection of the property doesn't mean that the Buyer will not do one as well.  The Buyer will and the Seller should.  That's the difference.

If something is made aware to the Seller in a property inspection report completed before the property is marketed, the Seller has time to consider the cost and to disclose allowances made in the price for such costs.

In the ideal situation, the Seller would take the appraised value of the home made by the licensed appraiser, adjust it for the historical listing to sales price difference and then deduct from that value the cost of what needs to be done in the inspection report to bring the property into marketable condition.

Why isn't this being done as a normal course of business today?  You got me.

Sometimes I think that we are afraid to suggest there is a cost to listing and marketing property.  Most times I think it is because we are simply afraid to do things differently.  Why?  Because we fear that others in our business who practice the current "process of least resistance" will win the at business. 

What a shame.  What a lost opportunity.

The industry continually gets low marks from consumers because its common business process management is never examined and truly improved - it is just practiced every day.

Time to reFresh the transaction again? 

I think so.  So far we have added about $700.00 (appraisal and inspection fees) to the cost of listing and marketing a home for the Seller. 

And what would we get in return for suggesting this vastly improved process?

Lots.  Two very relevant sources of valued information and disclosure that will serve to remove a tremendous amount of confusion and stress from the transaction sooner than later.  And second, the acknowledgement from the consumer that as an industry we have a better plan and a renewed transactional process that creates - by design - a higher degree of consumer care.

And that's precisely when putting last things first in the transaction alters the business of providing quality real estate services in a very good way.

Forever.

Last Things First

It's amazing to me.

The residential real estate industry has the strangest ways to order the essential parts of the transaction.  When I say essential parts I am referring to the timing and process used to value the property, inspect the property, disclose critical conditions related to the property.

There are many examples but let's take the first one and work through the list over the next few blog entries.

OK, here goes.  First up, property valuations.

So you want to list your home for sale.  You do what everyone else has been taught to do - you parade five or six real estate agents through your home and ask them what it is they intend to do to get your home sold.  And oh yes, how much their services will cost you.

It is then that you are introduced to the CMA.  The competitive market analysis or the comparative market analysis - the name depends on the agent.  The CMA quickly becomes the focus of all Sellers and will soon be the focus of the entire marketing offer.  It is supposed to represent a comparison of sold properties (MLS and public records), those properties that are for sale now and those properties that for whatever reason were offered for sale but did not sell or were withdrawn from the market.

So what is a CMA?  It is the agent's opinion of value based on the use of data from the local MLS, often some public record data adjusted by a local opinion of value adjusted by the agent.

It is the CMA that sets the listing price that quickly becomes the source of much distress and anguish as the Seller and Buyer go back and forth trying to agree on a sales price. 

So here's where I believe this last step really needs to be first. 

Beyond the use as an educated guess of the value of the property a CMA is not a measure of anything that will ultimately assure the close the transaction.  A CMA is really just one degree above the accuracy of an AVM - an automated valuation based on the use of public record data.  An AVM is what Zillow provides today on its web site - an admitted estimate of value.

So what should come first to improve the property valuation process in the transaction?  It is the formal appraisal of value.

This is the valuation prepared by a licensed appraiser.  The appraisal determines the most critical valuation of the property.  It is only the appraisal that will contribute to getting the transaction closed and it is ultimately the only measure of what a bank will lend on the property.

The appraisal results from the work of a licensed professional that understands how to value properties based on numerous measurements to include; MLS information, public record data, replacement cost estimates, rental multipliers and specific standards for determining a valuation banks will rely upon to fund a purchase of the property. 

So what could the use of a licensed appraiser earlier in the transaction do for the consumer?

Start with reducing the back and forth over what usually comes down to the level of haggling over pennies is often blown to pieces when the appraisal arrives and is injected into the transaction.  This is when the value of the home usually differs with the "sales price" that has painfully been agreed to by the Seller and the Buyer with the use of numerous counter offers and counteroffers to the counter offer.  Unless it is an all cash offer to purchase or the Seller intends to finance the property for the Buyer - it is only the appraisal that really matters as it relates to getting the transaction closed.

So why is the formal bank appraisal last and not first in the transaction?  Good question.  And in this very difficult financing environment - a really good question.

If the property doesn't qualify for a loan then the transaction doesn't happen.  Period.  The appraisal is the banks only means to determine if a property qualifies for a loan. 

So why last and not first in the transaction?

I'm told by agents that the reason is because it costs money for a real appraisal and the CMA is free.  Really.  A free CMA versus an opinion of value from a licensed appraiser?  Which would you chose to use in marketing the single largest asset you now own?  Is the investment of $400.00 worth knowing what the bank will ultimately finance for a qualified Buyer on your property?

I don't know about you but I would pay the cost of the appraisal as a Seller.  Anything to avoid the high likelihood of a root canal experience that most real estate agents now put their Sellers through in the seemingly endless renegotiating the sales price of the home during the closing process. 

The only real question here is what is it going to take to break the "CMA mold"?

Your guess is as good as mine but in cases like this one I tend to defer to the two most powerful words when envisioning change.  They are - viable alternative. 

Someone who agrees with this observation and offers an improved way of doing things and then goes to the bank sooner and more often.

Someone like what Apple did to Motorola.  Like what Virgin Atlantic did to British Airways.  Like what Google did to Yahoo. Like what Trulia did to REALTOR.com.  And on, and on.

Think about the increased level of satisfaction in the real estate marketing and sales experience.  Think about the differentiated service offering for reordering the transaction by putting what everyone else does last - now first.

So where are the other "last things, first" opportunities in the standard residential real estate transaction? 

Stay tuned.

Gone in 30 Seconds

I can hardly believe what I read this morning in Inman News.

Century 21 announces that they are spending real money on TV ads.  You must be kidding me.  Tell me this isn't true!  What do they think they will accomplish with this ad spend anyway? 

They say the campaign is  intended to to announce to consumers that C-21 agents are now well trained.  "We think the market knows exactly who Century 21 is, but we're not sure they know who our agent is, and what their capabilities are," said Bev Thorne.  

Really.  What were the C-21 agents before the ad campaign?  Untrained?

And are you sure you are able to make the claim that ALL of the C-21 agents have been fully trained at this time?  Do you really think anyone would believe such a thing in real estate?

They also say that all of the media spend will be measured carefully, ""We will track closely the (return on investment) from all our spend . . . " Thorne further stated. 

Really.  How do you closely measure the leads that come from a 30 second TV ad?

Century 21 is also very proud to announce that the campaign will run on this year's Super Bowl.  Really.  I can recall running a real estate franchise ad on the Super Bowl as well.

It was in 1992 when I served as the head of marketing for a major franchise company.  I later called the entire experience and return, "gone in 30 seconds".  To be specific, a total wasted investment back then of $1.2MM for a 30 second TV spot on the Super Bowl.  Today?  More than double that figure.

I thought then - how many viewers are missing the 30 second we just bought after the coin toss as they went to the kitchen to refresh their beer and use the "room down the hall to the left"?

You know the crazy thing about all this is that it is the C-21 brokers that are the ones who are paying for these TV ads, not Century 21.  I wonder what the brokers really think of such waste in times when just keeping the doors to the brokerage company open is a real challenge.

And what is the message being sent for what now is likely to be a $2.5MM investment (ad placement plus ad production costs for a 30 second spot) on a Super Bowl ad?  Work with Century 21 agents to buy and sell homes because they're educated?

I wonder how much advertising could be purchased on an online media site for the same money targeted more appropriately at selling C-21 listings?  You know, the kind of efforts that help generate revenues for local brokers by exposing listings - the product - to real buyers online. 

This versus advertising the C-21 brand to do what is very obvious - to simply sell more C-21 franchises.

Reading further into the Inman article I noted that a group of the Century 21 brokers have already weighed-in with some kind of class action complaint about the company.  What a shame.  What a lost opportunity. 

And what an unfortunate sign of the times for traditional real estate franchising business models.

As it relates to Century 21's former CEO, Tom Kunz's decision to pull the plug on TV ads in 2009.  You were so right on my friend.  Maybe, just maybe your wisdom to make such a decision had something to do with the fact that you were a real broker with a real brokerage company that understood what it takes to keep the doors open in tough economic times.

My opinion.  Spending precious ad dollars that are collected by a franchise from its brokers on  "hyper-macro" TV advertising just in time for everything meaningful in the business to be hyper-local - makes no sense at all.

At the rate of nearly $90,000 per second for the Supper Bowl ad I wish C-21 a lot of luck demonstrating that this strategy was anything more than simply another $2.5MM spent on TV advertising by a real estate franchise that is - gone in 30 seconds.

Now You See It - No You Don't

OK here we go.

What do listings, consumers and Google all have in common?  I hope you guessed it - the answer is search.

As it relates to doing business with at least 90% of all consumers searching for real estate, the key to doing business is ONLY about search.  Today search is everything in real estate. 

Period.

Consumers and especially real estate buyers don't care about brand, company or even the agent - they are searching for the home that meets their needs and requirements - and in real estate that means being able to search for one product - listings.

So here comes the zinger.

A quick inspection of the majority of all franchise, broker and agent real estate sites reveals vastly over cluttered offerings containing everything but lacking an effective means to direct consumers to the listing they are searching for on the site.  Now I know what you are saying - that isn't true I have search on my site - but it is true.  The problem relates to the degree of search that consumers want and can't experience on the majority of the industry's real estate sites but CAN get now on Google.

How do I define "effective search"?  In one word, Google.

The vast majority of all real estate searches begin on Google and then Bing and Yahoo follow.  Google is without doubt the largest real estate web site in the world.  Number two?  YouTube.  Google directs consumers to other relevant places to find the details related to what the consumer is searching for on Google.

If you think I am wrong and you believe that your search functionality is truly as effective as Google try this two step exercise.

First, pick a listing contained in the listing database on your site and type in the same address into the Google search bar on the Google site.  Ideally, pick one of your own listings.  Now see where the Google search results direct you to find that listing.  If the listings on your site do not appear on the first page of Google's search results - you lose big time.

And the winners are?  Those that do because they are seen as more relevant to Google and because they have optimized their web sites, listing content and search index to be ranked higher in Google's organic search results.

Second, go to Google and type in a typical consumer search query made on Google for a home search.  Type in your city name, your state, 3 bedroom, 2 bath with a hot tub.  Now take note the search results.  A whole list of listings that match that search criteria and links to places to find out more details.  Then type the same search criteria into your site and note the search results - you are lucky if you can get past the error messages and the common no listings matching your search criteria can be found messages.

Tilt.

The problem with the majority of the current brokerage industry sites is that the content on the site is irrelevant in big search - at the Google, Bing and Yahoo level where everything begins.  Listings on your site are not recognized or seen in big search as the source for the listings therefore you don't get the consumer traffic directed to your site.

Why is this?

Among other very key technology issues a good part of the answer is why Google doesn't need to prompt consumers by ghosting into the search box the directions of type in "address, city, state, zip or MLS number".  Search is not limited by anything and using more words to define your search is the consumer's prefered means to secure a higher quality search result.  But not on real estate sites!

So now for the waste.

Beyond the loss of search directed buyer business for those who are fortunate enough to have salable listings these days - my calculations currently estimate that more than $175 million per year is now being wasted on outdated, ineffective search functionality framed on templated franchise, broker and agent brochure web sites.

Time to reFresh the industry's local search strategies, its user expereinces and most of all its web site vendors?  I think so.  In fact way past that time.  You decide.  Better yet, do something about it.

Now you see it = huge opportunity in search.  No you don't = the current total lack of a quality search experience on most a franchise, broker and agent real estate domains.

More later.

P. S.  Try the second search effectiveness test above on the newly announced and revamped http://www.c21.com/ site.  Oops,  Houston we have a problem - errors!