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.
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:
http://bit.ly/VerifyRE
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?
“The Sunday paper has some listings, the MLS does too, but there’s not much for sale yet. Maybe we should just start driving around.”
Waiting for the Spring inventory like this frustrated home buyer? For the past 15 years, The Real Estate Cafe has encouraged clients to experiment with an unconventional approach we call “proactive house hunting.” So, when some real estate technology gurus recently called “social search” a trend to watch, we thought, this is an idea who’s time has come.
Proactive house hunting begins with your DREAM life and your dream search, not what’s on the housing market. Ask yourself, “If everything were for sale, where would you REALLY like to live?” Then ask, what would it be worth to do the unthinkable: save money by beating real estate agents and competing buyers to home buying opportunities?
If you want to avoid manipulative bidding wars this Spring, the time to experiment is NOW! Otherwise, you could be competing with three other groups:
1. Real estate professionals, like builders, flippers, and cash investors;
2. Listing agents who are eager to put homes in the MLS; and
3. Competing buyers, who all REACT to the same new listings as soon as they hit the MLS;
After attending a recent real estate investor meeting, we’re convinced the only way to get ahead of the competition is to BE PROACTIVE. First, ask yourself how much it would be worth to identify a home buying opportunity before anyone else does, then decide to invest some of that money in a comprehensive proactive house hunting campaign.
Paying “bounties” to injure players on opposing football teams is despicable and should be criminalized, but paying finders fees—think real estate bounties—to “bird dogs” is an established practice that investors and builders use to scoop-up home buying opportunities before others know they exist.
Proactive house hunting can identify homeowners who “intend” to sell at some point in the future, and explains to them the benefits, financial and otherwise, to deal directly with you, before the sharks and listing agents arrive.
While real estate companies spend millions of dollars annually trying to attract new listings, proactive house hunting is a new way to create win-win opportunities for DIY home buyers and sellers who want to save money and are willing to interact in new ways.
Some of our clients are already experimenting with good, old-fashioned letter writing; but that’s just the tip of the iceberg. We’ve developed various strategies over the past 15 years; and as buzz about “social search” attests, social media should help deliver the money-saving benefits of being proactive.
If you’d like to explore proactive house hunting or hire The Real Estate Cafe to design and implement a comprehensive proactive house hunting campaign on your behalf, please let us know. We’ll gladly schedule individual demos, online or off; and if there is interest, we’ll offer a small group presentation within the next 24 hours to 10 days.
Are the stars aligning? Two weeks after the White House issued a blue print for a Consumer Privacy Bill of Rights, the Consumer Financial Protection Bureau is participating in its second National Consumer Protection Week. Time to revisit the Real Estate Consumer Bill of Rights first published in 1999?
As bubble-weary house hunters ask if 2012 will mark the bottom of the housing market, the need to protect them from another boom / bust cycle or simply overpaying for their home through manipulative, blind bidding wars is, IMHO, a moral imperative.
Background
Eleven years ago, The Real Estate Cafe played the lead role creating a Petition which caused Consumer Union, publishers of Consumer Reports, to call for a Home Buyer Bill of Rights in Congressional testimony in May 2001. We've blogged about rights and reforms repeatedly since then, and invited fellow real estate consumer advocates to use our wiki to update a working version of the Real Estate Consumer Bill of Rights on the 5th & 10th anniversaries of the Congressional tesimony.
Here's a short history of the Real Estate Consumer Bill of Rights as we know it. Can any readers help us turn this into an interactive timeline?
Call to Action
Some predict 2012 will be the Year of Customer Activism. What do we need to do to make that happen in real estate?
Can we use the Nation Consumer Protection Week hashtag, #NCPW to invite home buyers and sellers around the country, plus real estate consumer advocates like the Consumer Federation of America (@ConsumerFed) and Consumer Advocates in American Real Estate (CAARE.org) to seed conversations about protecting real estate consumers in local housing markets?
Why? Because housing prices have fallen back to 2001 levels, and we cannot afford -- as individuals or a nation -- to see another decade of wealth wiped out by the repeat a boom / bust cycle. Since residential real estate brokerage practices are outside the regulatory scope of the CFPB, and state regulatory agencies are dominated by Realtors, it's essential to ask consumers what they think the Top 10 issues are facing them as home buyers and sellers.
The Real Estate Cafe made it's first list of the Top 10 Consumer Issues in Real Estate in 1995, and have updated it periodically. Since housing prices have lost a decade, want to know what we called the Best & Worst of 2002 from the real estate consumer's perspective?
PS. Trying to decide whether it makes sense to rent or buy? An NPR talkshow recently discussed challenges younger homebuyers face entering the housing market at this time. Here's our comment. Yours, of course, are welcome below or via Twitter @RealEstateCafe
I LOVE MAPS,
collaborative maps online to be more specific. Six years ago, I was surprised and thrilled that
Real Estate Bubble Maps our clients
helped create were awarded the "
Best Real Estate Map of 2006," by Platial, one of the original (now defunct)
wikimaps. So when I learned about tonight's presentation on "
The Power of Maps," it reignited dreams of cocreating a variety of maps to empower real estate consumers to
save billions of dollars annually.
It is short notice, but The Real Estate Cafe would like to host an informal TweetUp before or after tonight's discussion, 7-9pm at Design Studio for Social Intervention to brainstorm about using "the Power of Maps" to turbo-charge our blitz marketing campaign for expired & canceled real estate listings.
Why a mapping event? As we blogged recently, more than 20,000 MLS listings EXPired or were CANceled across Massachusetts during 4Q2011. Although potential home buyers CANNOT access those failed listings online through the broker-controlled MLS, individual homeowners could add their properties to collaborative maps designed to EXPedite C2C C2C — consumer to consumer sales — without real estate commissions. That win-win would convert some of the $250 million in lost commissions into consumer savings.
That's just one of our mapping fantasies at The Real Estate Cafe. As the headline of this blog post suggests, we've also got ideas about crowdsourcing pending sales and bidding wars, plus some other SECRET projects. We've already let one of them out of the bag, our Million Dollar Markdowns maps -- think disaster tourism meets real estate; and we've blogged about "creating the opposite of crime maps" in the past, too.
The "Ocean of Love" matrimony map above also reminds us of community maps we've tried to seed in the past on Valentine's Day. If you love using maps to "Challenge the Status Quo or Change the World" (see subsection on page 192 of readings for tonight's discussion), we'd love to TweetUp with fellow Maptivists and other kindred spirits.
If tonight doesn't work for you, would anyone like to TweetUp again tomorrow, tentatively 3:30pm Thursday @VentureCafe in Kendall Square in Cambridge or meet privately? Our goal is to continue brainstorming innovative strategies to revive EXP+CAN listings and deliver millions in consumer savings? If you're a DIY homebuyer, we invite you to download our FREE 10 Step "Insiders Guide" to get started.
