Redin's gotten a lot of visibility in local and national press this Spring, positioning itself as experts on bidding wars. Last week, their CEO told the Los Angeles Times they're teaching their agents "how to win a bidding war;" and now, as the image above shows, they're extending that educational programming to homebuyers in Boston. What's mind blogging is they also appear to be poised to host their own private bidding wars!
Click on any of the Redfin's "Sneak Peek Open Houses" listed in Boston.com's Calender section and EventBrite and you will read:
Redfin Agent [name deleted] and the Listing team invite Redfin customers to an exclusive “Sneak Preview” of a listing that will be “live” on MLS after this special Open House. We’re not advertising this to the general public (emphasis added), because we want you to have the chance to see it first!
I don't mind if an individual home owner selling "for sale by owner" (FSBO) invites friends and neighbors to preview their home, in fact we recommend it. But when a listing agency limits their open houses to their "customers," they mock their own marketing materials that promise "maximum exposure" and betray their fiduciary duties to their seller clients.
And that's just the half of it.
Wonder how Redfin (1) disclose their conflicts of interest to buyers, and (2) whether any of their buyer clients who have been "abandoned" look for a real buyer agent to represent them without a conflict of interest? Those questions beg another we've asked before: Is Redfin willing to disclose how many of their own buyer clients are competing in bidding wars against other Redfin clients?
By the time you read this, Redfin may cancel the Sneak Peek Open Houses planned in Boston and Dedham tonight, June 19, 2012 at 5:30pm. It appears that they've already moved their Multiple Offer webinar from tomorrow to Monday.
Once a champion of technology and transparency, increases in minimum fees and shrinking rebates have undermined Redfin's original positioning as a money-saving business model. Worse, now they're playing the same "hide and seek" game with new listings that old school traditional agents do. Add their Tweet yesterday complaining that "low appraisals [are] screwing up deals," and IMHO, they've lost their credibility as both consumer advocates and buyer agents.
Should this blog post close by cautioning DIY home buyers that Redfin's conflicts of interest may cost you more than their rebate, or thanking Redfin's for providing more evidence of the return of an unsettling trend, also reported by the Los Angeles Times: listing agents are trying to sell listings before they hit the MLS (a technique known as "pocket listings"). That practice heightens a sense of urgency and scarcity, real or imagined, among home buyers, increases prices and in-house sales, and makes revenues look good for companies who would like to go public. Two weeks ago, the 800-pound gorilla of in-house sales, the parent company of Coldwell Banker, Century 21, Better Homes & Gardens, Sotheby's International and other real estate brands, filed their IPO; will Redfin be next?
If investors think Facebook was overvalued, they should do a double take on dual agents and designated agents before they get taken, again. How do consumers make sure a real estate agent is really on their side? Ask the brokerage to include a Pledge of Allegiance in their contract (see buyer sample and download informational brochure below). If you're a seller, (1) do the same, (2) never agree to designated agency or dual agency, and (3) get a comprehensive marketing plan to maximize the exposure of your listing via the MLS and all other real estate portals BEFORE you sign a listing agreement.
If you'd like to sign-up for a FREE conversation online with a former New York real estate regulator, please call the Real Estate Cafe at 617-661-4046.
Without big bucks, are hip urban neighborhoods worth it? That's the question that has "Generation Broke" and some babyboomers sparring on Boston.com real estate blog today. If they both step back and are willing to stretch their perspectives, this article will help explain the growing disconnect between housing supply and demand:
How the Housing Crisis Shafted the Next Generation
Before the close of the last century, the Dotcom bubble created an oversupply of high paying jobs locally and trillions of dollars in paper wealth nationally. Both eventually vaporized, but not before trillions in paper wealth moved into real estate. That enabled parents to tap their bloated home equity to pay college tuition, help with adult children with down payments and cosign loans.
A decade later, all of that has changed and millions in each generation have been hurt as described below:
"...the intergenerational connections that long defined the American Dream have been stretched to their limits, pitting seniors against young people, whites against blacks and Hispanics, and the wealthy against the poor, according to experts."
"Today, students graduate burdened with debt, homeowners owe more on their homes than they are worth..."
"At the same time, more and more seniors are struggling to make mortgage payments or hold onto their homes, let alone help their children or grandchildren with tuition costs."
"On average, house prices have fallen by more than 30 percent from their 2006 peak, while housing wealth has fallen by over $7 trillion, according to industry figures. This has led to 11 million homeowners who owe more on their mortgages than their homes are worth, an amount totaling about $700 billion."
What's the bottomline? Nothing can replace the catastrophic collapse in home equity or mend the intergenerational breach quickly. But as purchasing power shrinks and Generation Y and others downsize their housing expectations, micro-lofts and A-Dorms (adult dorms) can provide the opportunity to enjoy "hip neighborhoods" in Boston and cities without big bucks. It will be interesting to see if the micro-apartments in Boston's innovation District, which have been criticized for being too expensive, will inspire more affordable alternatives like these single-room occupancy units in Beverly.
That's if you're content to rent. If you want to buy, you may still need a rich uncle. That's why the Real Estate Cafe has begun thinking about how to use crowdfunding to turn our 100% commission rebate into a "Do-it-yourself" Rich Uncle.
After the Arab Spring last year, some pundits predicted 2012 would be the "Year of Consumer Activism." But 80 degree February days triggered Spring Fever early in the real estate market, instead of consumer rebellion. That may be changing. In the past 24 hours, The Economist & Financial Times have hit the real estate industry with a one-two punch the same week 10,000+ Realtors marched on Washington.
With one in three households underwater, repositioning Dealtors as "Architects of the American Dream" is a hard sell -- particularly when surveys show consumers believe that real estate agents are overpaid. More important, millions of equity-starved homeowners simply cannot afford to pay the prevailing real estate commission (watch short video).
Into that pain comes a headline from The Economist which could become a rallying cry:
The great realtor rip-off:
Why is it so expensive to buy or sell a house in America?
As housing inventories rise is the stage set for bidding war backlash? Every year, thousands of unsold properties come off the market after the 4th of July. After buyers willing to pay “tens of thousands of dollars over asking price" fail to materialize, will disappointed homeowners drop their real estate agent and try selling "for sale by owner"?
Beyond that semi-annual flood of expired and canceled listings is an overdue systemic change that could result in billions of dollars annually in savings. What would it take to use this pregnant moment to mobilize a new generation of tech-savvy, DIY home buyers and sellers eager to save money on real estate transactions?
Next year marks the 20th anniversary of “The Consumer Revolution in Real Estate,” a two-day conference hosted in Boston with 50 panelists including Ralph Nader and Steve Brobeck, Executive Director of the Consumer Federation of America. We're still driven to redesign the real estate industry, and are eager to collaborate with others, inside and outside the industry, to develop disruptive business models and apps capable of delivering billions of dollars in savings annually.
At a minimum, we’d like to begin hosting educational events for FSBOs, including FSBO Field Trips; and create a “Defensive Homebuying” course for DIY home buyers, too.
If you're a real estate innovator in Boston or a disgruntled DIY homebuyer or seller, can we invite you to watch our 80 second video introduction to the Real Estate Cafe? If you like our mission, we'd like to share some of our money-savings ideas and initiatives and invite your dreams as well. We're available to (1) TweetUp this weekend and Monday, (2) host a roundtable offline on Tuesday, or (3) "hangout" on Google+ at a mutually convenient time. Text of call 617-661-4046 to let us know what works for you.
If you'd like to save money by selling "for sale by owner," please preview our slideshow below and add our upcoming seminars & fieldtrips to your watchlist.
Don't know whether to invite Jon Stewart or Stephen Colbert to satire the luxury listing agents quoted in recent news coverage, or harness industry spin into a wind farm. But with more research, trust that readers can assess, or at least monitor, about what's happening in the luxury housing market across Massachusetts from the buyer's perspective. Consider the following:
- Rather than looking at a 27% rise in sales over $2 million (an estimated 15 homes across MA); why not look at the 27% of single homes sold over $1.4 million during early Spring (02/07-5/06/12) for below assessed value?
- Or the 10 of 20 single family homes sold over $2.85 million during the same three month period for more than one million dollars off their original asking prices?
- Or instead of focusing on offers accepted 3 to 10% below the last list price, cheer about sales more than 20%, 30%, or 40% below the original asking price (as shown in the graph above)?
Finally, before falling for "shrinking inventory" hype, why not stop to convert current sales into annual absorption rates and compare that to active MLS listings? If there's a three year supply of single family listings over $2M, and demand for McMansions has peaked, what's the rush? What do readers think will happen to the price and pace of luxury home sales, and does it make sense to buy one before knowing who the next president will be?
What we do know is that pending sales of luxury homes are up, particularly homes between $1.4 and 1.85M. Does that reflect increased demand or a decline in seller price expectations and substantial price reductions including some over $1 million? We'll monitor those questions and more, and invite luxury home buyers to use our research and premium content to assess the luxury housing market from their perspective.
As with past clients, the SAVINGS could be significant - six or seven figures off the original asking price not a mere 4% before median sales price -- the price change reported in recent news coverage. Click on the link below for a sample of The Real Estate Cafe's analysis of "million dollar markdowns."
Is Nationwide Open House Weekend (NOHW) the Realtor's version of Black Friday? Hardly. Instead of deep discounts to get you to shop early, some consumer advocates say NOHW is "farce" that could cost uninformed homebuyers -- see #4 in SmartMoney article entitled, 10 Things Open Houses Won't Tell You.
If you're a DIY homebuyer, who doesn't "need" a buyer agent, do you know that signing into an open house this weekend could forfeit your ability to collect a commission rebate -- up to 100% from the Real Estate Cafe?
Unfortunately, the turf battles in real estate extend beyond open houses, so before requesting an appointment through any real estate site, read this! By definition a listing agent represents the seller, so you may inadvertently forfeit your ability to work with a buyer agent if you schedule an appointment directly with a listing agent!
Ironically, self-reliant, tech-savvy home buyers sometimes let their smarts get ahead of your financial self-interest, as our comment on this blog about "Facing multiple bids?" post cautions:
If you’re doing most of the work yourself, you could be getting a rebate back from a buyer agent who works on a rebate model. If you’re not, you’re rewarding the very system you are rightly criticizing. And for those DIY homebuyers who bypass buyer agents all together because they don’t need help, they are ironically giving the listing agent a double pay day, instead of creating getting cash at closing to reward themselves.
If you've got time between open houses this weekend, or anytime soon, we'd like to tell you more about our Defensive Homebuying strategies. Just let us know if you'd like to meet online or off. If there is interest, we'll gladly host a Defensive Homebuying 101 class, again, online or off.
Three weeks after a front page story in the Boston Globe proclaimed that bidding wars are back, fears are subsiding after readers blasted six blog posts on the subject, including one yesterday: "Bidding Wars: Hype or Reality?" Some of our preliminary analysis was linked to that post; and now we're ready to reveal more to help DIY home buyers relax, even if it's Friday the 13th.
As the graph above shows, only 13% of MLS listings sold over asking price between March 1 and April 10th -- just 3.4%, a mere 176 listings statewide sold for more than $11,100 over asking price! By contrast, another 282 listings sold for $3,100 or LESS over asking price. Not exactly scarey stuff, right?
Want to hear something that is spooky? Guess how many properties sold for more than $11,100 BELOW the list price? 2,263 listings -- would you believe that's 13 times the number that sold for $11,100 OVER asking price?
You can't make this stuff up!
But if you fall in love with a property and fear you'll have to pay over asking price to win a bidding war, don't make up your mind without looking closely at the data. If you click on the link below, we'll create a customized report from the data graphed above to help you decide if you need to go over asking price and how far.
We advise our clients to avoid bidding wars by being proactive. There's lots more on that subject, and so much data we're offering commission rebate credits to clients who help us analyze the data and crowdsource bidding wars.
Interested in that offer or some free number crunching? We'll WAIVE the cost of the first 30 minutes, a $75 value!
When it comes to bidding wars, the real estate equivalent of arms control is a combination of reason, restraint, research, field reporting and fact checking. The key questions are: (1) What's really happening, and (2) what's the impact on individual home buying opportunities and housing markets across Massachusetts? As with our award-winning Real Estate Bubble Map in 2006, The Real Estate Cafe wants your help to crowdsource bidding wars. We can provide MLS data but need field observations and war stories, particularly if you've been wronged (would you believe there have already been 5,000 complaints received in Toronto?). And as before, we're prepared to reward contributions with commission rebate credits.
First pass: Bidding wars in Top 10 housing markets in MA
Rather than addressing the entire market right away, our first pass was to take a snap shot of MLS residential listings in the top 10 cities, neighborhoods, and towns in Massachusetts, as defined by the Warren Group and Boston Globe Magazine, between March 1 and April 5, 2012. Then to slice the data more narrowly, we focused on listings that have been on the market for 7 days or less, or gone under agreement within 7 days or less during the same period. That data query resulted in 299 properties across the Top 10 towns. Here's what we found:
- 40% of the NEW listings are still active;
- 42% (of this sample, not all new listings) are already under agreement; and
- One in ten properties have already closed -- presumably cash buyers.
Here's the good news if you're a homebuyer: Only 13 of the properties that have been on the market for one week or less sold for OVER ASKING PRICE. That’s just 4% of the 299 listings identified in the Top 10 housing markets across MA. Hardly a compelling indicator that the housing market is roaring back, and nothing close to "people trying to get on the last lifeboat on the Titanic," as one bombastic listing agent boasted two weeks ago in a front page story in the Boston Globe.
But let's return to the data in our limited sample before rushing to conclusions.
Of the 31 sales that closed in a week or less, 42% sold for over asking price. That sounds ominous until you realize, once again, that we’re talking about thirteen listings in the Top 10 towns. Would you believe that three of those bids were $1,100 or less over asking price? Not exactly a show of strength from cash buyers, and hardly the stuff of headlines.
So what made front page news? Some listing agents are quick to sensationalize, so that fact that prices were driven more than 5% above the original asking price sounds like a market on fire. That only occurred in six of the 299 listings in our preliminary data analysis, and the details are revealing:
- Two properties were priced about 15% below their assessed values and sold for about 10% below their assessed values;
- Two properties were located in Cambridge where the People's Republic has been replaced by the Poupon Republic; and
- Two luxury condos priced over $1M in Back Bay generated bids approximately $100K over asking price. (That may say more about the difference between the 1% and the rest of us, than it does about the housing market).
Stay tuned for the rest of the story
When others reported that 15% percent of the homes put on the market in Greater Boston during 2012 have gone to contract within three days, buyers may have assumed many of those homes were selling over asking price. So far, looking at the narrow market slice described above, we've only identified 13 sales over asking price between March 1st and April 5th, but nearly 100 more properties are under agreement. As their sale prices become public in coming weeks, we'll know more about what’s really going on.
Until then, we encourage buyers to act prudently, and don't fall for fear or pressure tactics that could cause you to bid unnecessarily over asking prices. Further, we invite you to click on the button below to make an appointment to:
We're available tomorrow April 7 at BarCamp Boston or at your earliest convenience, online or off. If it's urgent, just call us at 617-661-4046.
Have you see the front page news yet? Bidding wars are back, or at least that's what some buyers are experiencing as they house hunt across Eastern Massachusetts.
The story, IMHO, should be required reading for any home buyer, as much for what it doesn't say (or even ask) as what it does. That's not to say the reporter did a bad job; bidding wars are a complex subject: seasonal phenomena at best, full of smoke and mirror manipulations at worst. Are bidding wars really back? How will you defend yourself? Get our preliminary response, we invite yours:
- What would you like to know about how to compete in or avoid bidding wars?
- Should industry regulators or app developers provide a solution to prevent a replay of manipulative bidding practices that helped create the housing bubble?
- Think we should publish a guide to "games real estate agents play" for April Fool’s Day (eg. see cartoon on our 2005 ad above warning homebuyers about that the housing bubble was about to pop)?
If so, The Real Estate Cafe invites your contributions, either real victims stories or parodies of industry hype! Our comment on this morning's Boston.com blog post addresses one of them:
Jima,—Thanks for raising the “Phantom Buyer” technique, one of the games listing agents play this time of year when there is a short-term imbalance between overeager homebuyers and MLSlisted properties. As Scott knows, The Real Estate Cafe has proposed a variety of responses to “blind bidding wars” and the unethical business practices that sometimes accompany them.
Here’s one of our blog posts from last year:
Hope to hangout on Google+ and even host a virtual Town Meeting shortly to discuss the “problem” and possible responses, both for individual buyers, industry regulators, and application developers.
First things first, though. SVV, thanks for asking: What’s really happening with bidding wars, and how much of this is self-serving industry hype and high pressure sales tactics? IMHO, 48 hours bid deadlines may create a fear of loss, but shouldn’t be mistaken for housing demand and purchase power roaring back. Glad a lead listing agent and buyer agent quoted at the end of the Globe article both told buyers not to overreact to a passing phenomenon.
Given that, one wonders why the story was on page one? Want to read our line-by-line response to the Globe story and be invited to the virtual Town Meeting if there's enough interest to host one?
Good news / bad news?
Looks like the Feast of St. Joseph passed yesterday without any coverage on @WSJrealestate, @Realtors, or @InmanNews, the leading real estate technology site. Would you believe an article in the Wall Street Journal entitled When It Takes a Miracle to Sell Your House was the most emailed story of the day five years ago? What's happened -- have people lost their faith? Are rabbits feet next?
If you purchased one of the 2 million St. Joseph statues alledgedly sold each year (unconfirmed source) and your house did not sell, The Real Estate Cafe has some BuyBack offers. Read on, particularly if you own one of the 20,000+ Expired & CANceled MLS listings during 4Q2011 across Massachusetts.
In 1998, Inman News wrote a story about one of the first real estate web sites to sell St. Joseph statues online. When we searched their archive for "St. Joseph statues," we did NOT see our response below; but you can clearly see that their headline called the practice of burying St. Joseph statues upside down a "trick" (that's an understatement IMHO, no pun intended):
Beyond Superstition: Doing Justice to the "Just Man"
In the past, articles like Inman News’s "Faith can move real estate: St. Joseph’s statue trick gets Web site" would have hit my sacrilege hot button sending me into a fit of holy anger. Now, I see the playful human interest story as a timely opportunity to invite believers and non-believers to draw inspiration from this guardian of the Son of God during this, and important transition time in the local, national, and international housing market.
Whether Inman News published our op-ed or not, they did not to write us off as religious zealots. Instead, about a decade later they wrote about our interactive, interfaith campaign: "'St. Joe 2.0' samples the many forms of faith." Regrettably, that experiment in collaborative mapping ended when Platial pulled the plug.
Expanding spiritual perspectives to include social justice, we could not resist the urge yesterday to echo, at least indirectly, the "Mad as Hell and not going to take it anymore" sentiment Brad Inman described in his Welcome Keynote at ConnectNY 2012. Combine that with a leading real estate educator / author warning that Eroding Equity the Coffin Nail for Percentage Commissions, and that's a serious threat to business as usual!
Repositioning St. Joseph
When one in three households are upside down on their mortgage, is it a sin to "reposition" St. Joseph as the Patron Saint of Consumer Advocates and invoke his intercession to topple the obsolete, two-sided real estate commission that overcharges consumers billions of dollars annually?
Of course, The Real Estate Cafe can't bring about that revolutionary change single-handedly, but we've been waiting for the real estate industry and consumers to reach a tipping point since April 2006. Some have predicted that 2012 will be the Year of Customer Activism - Can social media harness enough holy anger from distressed sellers to expand money-saving alternatives to the traditional, one-size fits all real estate commission? Read what IAREC.com says:
“Our 100 year old business model is on life support… Absent new approaches, we’re already out of business, we just don’t know it yet!” (watch 2 minute video)
Got expired or canceled listing? Explore your "trade-in" options
We began to offer a St. Joseph Statue BuyBack Program five years ago; then, there were 16,000 expired & canceled listings across MA. Last year, there were 20,000+ during 4Q2011. That represents an estimated $250M in lost real estate commissions or a quarter of a billion dollars in potential consumer savings from one quarter, in one state alone!
Delivering those savings would be the answer to prayer for this consumer advocate and the DIY clients we serve. What's your take? Are people losing faith in burying St. Joseph? Should they bury Tim Tebow statues instead? Or like the Denver Broncos, should they explore trading options? Click on the link below to learn more about what we've offered in the past, and call 617-661-4046 to discuss what we're considering this year!
PS. Why do we keep writing about St. Jospeh statues? Read what one publicity hound wrote:
"No other column I have ever written in my 22 years as a newspaper editor and reporter resulted in as many responses..."
Catholics don't believe in luck, they believe in prayer and Divine Providence.
And Social Justice. And in President Kennedy's immortal words, "God's work on earth must truly be our own." So, was it providential to receive an email last night offering to develop a real estate app and run into the same programmer this morning, on the Feast of St. Joseph -- the Patron Saint of Social Justice -- while reading our guest editorial from 1998?
Beyond superstition: Doing Justice to the "Just Man"
Years before the occupy movement put income inequality onto the national agenda, the National Catholic Reporter wrote that "Housing was creating wealth, but leaving other behind." A decade ago, when housing values appeared to be doubling while homeowners slept, we created a friendly-fundraising competition and invited buyers, sellers, and everyone in the real estate industry to share profits and savings from online real estate transations with AIDS orphans (view slides) and asked St. Joseph to bless our S.O.S.
But the collapse of the real estate bubble undermined those good intentions. Now, one in three households are "trapped by negative equity" and some have wisely "repositioned" St. Joseph as an intercessor for those facing financial problems in general and foreclosure in particular.
As Patron Saint of social justice and protector of the Universal Church, we'd like to nominate St. Joseph for patron saint of "Consumer Protection" as well. Although we object to burying St. Joseph statues upside down, as consumer advocates over the past two decades, The Real Estate Cafe has deliberately looked at the real estate industry upside down and backwards:
From that perspective, we wrote a "Real Estate Minifesto" two years ago and are eager to work with software and app developers, like the one who contacted us last night, to co-create that money-saving vision.
Which idea starters could turn the real estate industry upside-down?
For starters, if sellers could find buyers as easily as buyers currently find listings, their ability to communicate directly could deliver billions of dollars of consumer savings -- perhaps as much as $20 to $30 billion annually according to industry critics. Imagine what could done if a portion of those savings were donated to non-profit organizations or invested in social justice entrepreneurs doing God's work?
Or contributed / invested in a crowdfunding mechanism to development and implement our reVRM Minifesto? Want to TweetUp to discuss that or join a real estate group to study Doc Searls new book on The Intention Economy: When Customers Take Charge? Let us know!
What's this got to do with social justice?
According to one award-winning educator / journalist:
"The typical mortgaged homeowner has less the 13% equity in the property. So what happens if they attempt to sell using the traditional percentage commission structure? After commission and closing costs, they might be lucky to net 2% on the sale. (see video)
New tools and business models can help home buyers and sellers interact more efficiently and enable better decisions with lower transaction costs. Won't working together towards that goal honor St. Joseph more than planting plastic statues upside down? If you've already purchased one, ask about our "St. Joseph Statue Buyback Program."