REAL ESTATE.COM by Michael S. Malone
The best thing about working inside the tech industry, especially at Ground Zero here in Silicon Valley, is that you get to see all of the hot new products and services before anybody. You know the people behind them, you know the strengths and weaknesses of the companies themselves – and, because you tend to follow the birth of products, rather than their deaths, you are always optimistic. Every new announcement is going to be the Next Big Thing.
The downside is that you rarely get to see these products and services in action. Unless you happen to use them yourself – and that’s usually for only a short time, as we tend to be early adopters of the last shiny new toy – you rarely see what happens as these technologies filter down into different markets and professions, get hammered into different shapes for different uses, and evolve from novelties into the everyday tools of a normal workday. It is this far side of the adoption curve that is truly alien territory for those of us who write about tech.
So, this week I decide to go exploring.
The occasion was the “California REALTOR® Expo 2009” [yeah, they capitalize it and trademark it, apparently to keep away the riff-raff non-certified real estate agents – and that’s the last time I’m doing it in this column], sponsored by the California Association of Realtors and held at the San Jose Convention Center. If you’ve been to one of these events – and most of you have – you know by the name that it is basically a trade show that combines a slew of association meetings with a big trade show of vendors serving the profession.
It was the latter that I wanted to see, so I made my way to downtown San Jose, the least Silicon Valley part of Silicon Valley, to the San Jose McEnery Convention Center [San Jose has a bizarre habit of naming public buildings after people who are still alive – hence former-Mayor McEnery Convention Center, former-Supervisor Diridon Transit Center and former-Transportation Secretary and Congressman Mineta – all guys you might bump into on the street out front of the buildings bearing their names.]
I don’t have to tell you that these are tough times to be a real estate agent or broker in California. Things have picked up a little bit in recent months here in Silicon Valley, but I don’t have to drive very far to find housing developments being bulldozed without ever having been occupied, and entire communities turned into half-ghost towns through foreclosures.
So, I expected this year’s Expo to be pretty bleak and only marginally attended. In fact, it managed to (just) fill the exposition hall and drew a healthy crowd. If that’s a leading indicator, perhaps the economy is finally turning around. Or, it may just be that California realtor profession had its shake-out a year ago, and these folks are the survivors – battle-hardened veterans who don’t miss a chance to find any new tool that might give them an edge.
And, indeed, there were a lot of new tools. As you might expect from a trade show of this kind, there were a lot of what might be called ‘novelty’ booths: refrigerator magnets, magazine subscriptions, insurance companies, even a scarf vendor. There were also the weird industry-only booths, like the one that specialized in removing bad odors from homes and the film studio that specialized in shooting online home tours. And, as you might expect in these sad times, there were a number of exhibitors who specialized in spotting and tracking home foreclosures – as always, one man’s misery being another man’s opportunity.
The real estate industry really needs to get its act together, not just in the fact that it watched, fat, dumb and happy as a 15 year supply of housing was built up in some areas with no buyers, but in terms of Internet technology.
A few years ago I was visiting my brother in another state and noticed a house for sale down the street. Curious as to the asking price, I went to the advertising realtor’s site, Remax, and found they showed no such listing. I could lean out the door and see the house, but on the computer it did not exist.
Earlier this year I took a look at Zillow.com after a friend mentioned it. Looked like a remarkable resource. And then I found that one new home on my street, sitting empty for years now since it was built, was not even listed. Their aerial photos were not recent enough to show it, so it did not exist. Even worse, one huge new mansion up the street, also sitting empty for years now, is identified on Zillow as being literally miles away from its actual location.
The really stupid part about this is that it is simple stuff. And if you can’t even get the simple stuff right, I don’t think you should push for even higher high tech. GIGO!
There I was thinking I’d read the article to find out what sort of innovations were taking place but nope, nothing.
As an agent with Coldwell Banker (full disclosure) I can pull up the MLS on a blackberry anywhere, in addition to always being in touch by phone and email. If a customer is on Realtor.com or ColdwellBanker.com and requests more information on one of my properties, I get a call to my cell phone within seconds. If I don’t respond to the ‘lead’, the system automatically forwards the request to the next agent on a randomly ordered list and so on. I can run most of my business from my phone or a laptop. Efax lets me receive and forward documents by email (with the client’s permission) – no running around with hand delivery or finding a fax machine. Even the key boxes, that allow an agent access to a home’s keys when showing, are now mostly electronic where the agent has a smart key pad, enters their code and the box pops open but also gives the listing agent an electronic record of who has shown the home and when – all accessed by internet – so we can ask for feedback on the showing. I can track the number of hits to my listings on Realtor, Trulia and Coldwell Banker and forward that information to my clients. All this helps give us more insight into why a home is not selling or how we can change the marketing or if we really do need to lower the price. I can edit my listing pictures or load video tours through all these web sites as well. Many feed automatically from the MLS but I can check, edit and enhance if need be. The technology is endless but that is what customers have come to expect – presentations that are very visual and quick response to questions and inquiries.
The train keeps accelerating and forever risks jumping the track……
I sold life, health,
and annuity products for 30 years,
made a good living, so I don’t complain.
But…
I see internet technology taking over the sales force.
You go into Mr-Mrs. Jones place of business and they already have the laptop computer bookmarked on the cheapest insurance rates in the marketplace.
The only advantage I have is that my company provides the cheapest rates on the internet, so I try to provide the service.
But if I didn’t work for the best internet company rates what would I do?
Like so many of my friends- Quit-Retire- or
work for pennies-peanuts on the dollar.
Internet sales have cost this country more jobs than the Democrats or Chinese could ever be accused of.
Maybe the Bay Area realtors can figure out a way to bring a risibly overpriced 2 bedroom, 800sq/ft crackerbox in Campbell down from 600k to 150k in the ten years it took to go up the “appreciation” ladder by the same amount. Seems real estate in San Jose went up 40k a year from 2001 onward, while real income barely budged. What’s bad for the realtors is good for responsible Americans. NOD, foreclosures, REO’s and forcing the banks to release the shadow inventory or be declared insolvent, are all music to my ears. The fool who massively overpaid for a house he/she could never really afford is about to have their idiotic Alt-A/Option Arm loan reset, and they are 200k upside down: fail and let the bank eat the losses.
The technology that tells the truth about all the defaults and allows buyers to track real inventory will win the game; not the NAR, who still want to inflate the bubble by preventing homes from hitting the market (in concert with the zombie banks). I use a host of online tracking sources, and see no point in using a realtor whatsoever. They are just a 6% millstone on my bottom line, and I don’t trust any of them anyway. This last great bubble has put more egg on their faces that they can imagine.
” I use a host of online tracking sources, and see no point in using a realtor whatsoever. They are just a 6% millstone on my bottom line, and I don’t trust any of them anyway. This last great bubble has put more egg on their faces that they can imagine.”
Truer words were never spoken!
You see an abundance of realtors at a conference, among other realtors, instead of out pitching, selling, sitting (on listings) and closing. And you see renewed health in an industry? Uhmmm….
Ubu…lucky you. The Govt already has this undercontrol. In terms of real assets; gold, euros, Shanghai houses, the those overpriced pillboxes are on their way back to the vale they had in 1997 dollars. Give them a few more years and they will be selling at 2 times the yearly earnings of people in hard currency countries.
The simple truth is this — most realtors, if not all, are worthless. They do a database lookup in MLS, hand you a pile of printouts and then wait for you to decide.
I’ve sold three homes in my life — in each case the selling agent did nothing. In one notable case the close on sale nearly fell through as a previously undetected lien was discovered. And oh, by the way, title insurance is necessary but worthless — we held title insurance, but it bought us nothing with respect to the undiscovered lien. My wife had frantically call the previous owners to work out the history of the lien. The realtor did nothing.
I’ve purchased five homes in my life. In each case the purchasing agent did nothing to very, very little.
My point is this — there is virtually no reason why the realty business as currently constituted should persist. Technology *should* be able to bring the incestuous community crumbling down. And eventually it will. For now the *real* story is the realty industry’s attempt to protect their monopoly.
I bid them good riddance.
Regardless of technological innovation, the residential real estate business is one of the most backwards and corrupt industries in existence. Good sales agents (or Realtors® as they have trademarked themselves) are probably less than 5% of the total. No technology is going to change that.
Fundamentally, the agent who supposedly represents the seller is actually paid by the buyer with the seller’s money. Get that? The agent you think is representing you is actually on the other side of the trade. The buyer pays for all the fun. In California, the buyer has to sign a form that acknowledges this conflict of interest — which only serves notice on this conflict and does nothing to alleviate it.
Some real estate agents earn their commission and are of great service to their communities, but most are lazy and dishonest.
To help realtors succeed or to substitute them with technology?
“The Govt already has this undercontrol.”
Well that’s a relief then.
Realtors act as a de-facto cartel here. Six percent plus another 1% in transaction costs? I fail to understand this. Transaction prices should fall to 3-4% maximum of the cost of the property. Technology will allow this. I mean, when you don’t need a buyers agent (because everything is online) what are you paying your 3% for? This is ripe for a tech firm that standardizes transaction terms, charges fixed fees for buyers, eliminates the buy side agent, and crushes the Realtor cartel.
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The real estate revolution has begun and I’m very excited to see what the future holds.
Realtors that can both convince buyers & sellers of their worth and then deliver that worth are likely going to be left by the wayside.
I believe in the not too distant future a real estate transaction will bear little resemblance to the way we do things today.
Look how quickly faxes and Fed Ex deliveries are falling (already fell?) by the wayside in favor of online signatures and emailed documents.
The problem as I see it, regardless of the tech side of the business, REA really do hype up prices even with the most educated buyers. Everytime they spout ‘multipe bids’ yet unwilling to provide evidence such other bids which are pushing prices higher even exist.
As with every bubble, there will be lots of fraud uncovered. I expect to see media exposure of realtor fraud using fictious (fake) multipl offers uncovered. There is no way in **** prices could possible explode over 300% in 10 years just in demand only.
Jim Lee: In would be concerned what is spoken between buyer and realtor. Yet they provide no documentation ‘multiple offers’ exist. All they want you to do is put in offers 10-15% above asking.
This practice hasent changed since 1998. After nearly a decade of the shanigans, it now apprent most buyer have been using option ARM loans to buy homes, while only paying the mininum payment. Most I doubt could have afforded 30 year fixed based on our incomes as our parents have.
I think we need to go back to face-face negotiations between buyers and sellers to ensure realtors arent pumping prices up to gain more on commission. Technology after the final prices are settled is OK with me. But transparency is really lacking here.
It’s always interesting to see how an outsider views the real estate industry. The technology innovations, however, are taking place among the VENDORS to the MLSs, not so much the MLSs themselves. MLSs contract out their MLS data services, they don’t do the coding themselves.
Ouch! Looks like my industry is getting a much needed dressing down on this page (and milllions of others too). A general observation: a trained and ethical pro is an asset that is worth the investment. I’ve also observed that, in my state at least, most of the clowns of the industry are washing cars, having either been stripped of their licenses or seen their income vanish. Most of the agents I’m dealing with now are stand-up people who have been in the industry for years.
Michael: Interesting on the real estate market. Here in Bandon on our very short block there are 5 houses; 2 of them are up for sale. Looking forward to coffee with you soon.
Michael: hello. Coffee?