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There have been thoughts that selling real estate could become fully-automated, and realtors as we know them will be kicked to the curb.  Here’s an example of how it could look:

For robo-real estate to succeed, sellers would have to be convinced that utilizing an auction-type method to sell their house is the best option – which it is.  The banks might convince themselves someday, because they have the experience to figure it out.

But as long as there are sellers who believe that they are the ones who determine sales price, regular realtors will be around to serve them.

In his video on Thursday, broker Jim Abbott made an impassioned argument against third-party advertisers. But it tip-toes around the role of real estate salespeople in general.

Do consumers want less from their agent?

In Colorado, agents can do less – they can be ‘transactional brokers’ as defined here, from wiki:

After 1994 (with changes in 2003), Colorado created the option of having no agency nor fiduciary relationship between brokers and sellers or buyers. Having no more than a facilitator relationship, transaction brokers assists buyers, sellers, or both during the transaction without representing the interests of either party who may then be regarded as customers.

In California, we don’t have ‘transactional brokers’ like they define them in Colorado, but there are “limited service” agents, and single or dual agency where buyers and sellers don’t have separate agents representing each party (like the traditional agency).  It can get murky.

Here is a court case that highlights one of the pitfalls:

In 2004, Hall Realty signed a transaction broker’s agreement to list and sell the Lake Forest Resort, a 12-unit RV park in Colorado owned by Daniel W. Weddel, which comprised six cabins, a home, a grocery store and an office area.

Hall Realty advertised the resort as a “turn-key business opportunity”; at the time, it was actually operating as an RV park. In 2005, Gilbert Barfield purchased the property.

In 2007, the Colorado Department of Public Health and Environment informed Barfield that the water supply system was improper for the property to operate as a 12-unit RV park. Around the same time, the CDPHE and the county reportedly notified Barfield that the sewage system did not have proper permits for the property to operate as it had been.

Additionally, according to court documents, the county informed Barfield that the property did not have the proper operating permits and ordered him to cease business operations.

Barfield filed suit against Hall Realty, alleging negligent misrepresentation (that Hall Realty was unreasonably negligent in determining the accuracy of its advertisement of the property as a “turn-key business opportunity”), fraudulent misrepresentation (on grounds that Hall Realty either knew the “turn-key” representation was false or was utterly indifferent as to its accuracy), and fraudulent concealment (arguing that Hall Realty either knew or was utterly indifferent to the fact that the seller had never obtained the proper permits, and failed to disclose this fact).

At trial, Hall Realty filed a motion for summary judgment, arguing that its role in the transaction was that of a transaction broker under Colorado Revised Statutes 2009 relating to brokerage relationships in real estate transactions.

As a transaction broker, rather than a fiduciary, Hall argued, its “duty ended by describing the opportunity as it appeared to be when listed: an (ongoing) ‘turn-key’ business opportunity,” and it had no duty to investigate or verify anything beyond that.

The trial court agreed and dismissed Barfield’s case.

Barfield appealed, and the Colorado Court of Appeals affirmed the trial court’s ruling. First, the Court of Appeals rejected Barfield’s argument that Hall Realty’s description of the resort as a ‘turn-key’ business opportunity — without investigating further — constituted negligent and fraudulent misrepresentation.

To prove fraud, Barfield would have had to show that Hall Realty either knew that its representations in the property advertisements were false, or was aware that it didn’t know whether the representations were true or false. Photographs submitted by Hall Realty to the trial court clearly showed that the resort was in active operation at the time of the listing.

Accordingly, ruled the Court of Appeals, “the evidence demonstrates that Hall Realty had no reason to believe that the resort was anything but an ongoing, operational RV park,” rejecting the fraud claim.

Further, the court rejected Barfield’s argument that Hall violated its duties as a transaction broker by failing to discover the permit issues with the property. On the contrary, found the Court of Appeals, state law expressly states that a transaction broker is not a fiduciary of the parties in the transaction, like a traditional real estate broker would be.

Additionally, a transaction broker, under the same act, is required to “disclose any adverse material facts actually known by the broker,” but “is under no duty to conduct an independent inspection of the property for the benefit of the buyer … and has no duty to independently verify the accuracy or completeness of statements made by the seller.”

Taken in conjunction, the court explained, the facts that the property was actually in active operations as a 12-unit RV park at the time of the listing, plus the act’s “clear directive that a transaction broker has no duty to investigate,” preclude Barfield from showing that Hall Realty’s misrepresentations were either negligent or fraudulent. As a result, the trial court’s ruling was affirmed and Barfield’s case was dismissed.

This long-time local broker is fed up with the 3rd-party real estate websites using our listings to make money.  It must be big money too, because there are now over 900 websites that advertise properties.

These websites (Zillow, Trulia, Realtor.com, etc.) are selling the advertising space surrounding each listing to other agents, making them look like the listing agent.

But does anyone frequent them?  Maybe Zillow or realtor.com?

This doesn’t affect Redfin or Zip, they are brokers who actually sell real estate.  He is willing to cooperate in our IDX system which allows each agent to distribute the properties on the MLS.

But it’s another sign of how chippy it is getting - our low-inventory environment is ripe for changes on how real estate is sold:

This visual experience is punctuated by the opening line in the MLS remarks:

“Gorgeous Ocean Views!!”

Send in your favorite photo of the year, and the winner will get tickets to the Chargers playoff game this Sund…..what? huh?

Hat tip to JS for sending this in, from nbcsandiego.com:

The slow housing market has inspired one San Diego restaurant owner to market her Mission Hills property the best way she knows how – with free food.

Terryl Gavre’s Mission Hills estate has been on the market for 5 weeks and in an effort to sell it quick, she’s tossing in a delicious deal.

Buy the estate and get free breakfast at her restaurant, Café 222 not once or even twice but for the next 15 years.

“I thought, you know, ‘I need to think outside the box. How do I get more people to come look at my house?’ The housing market is slow in general so why not offer something they can’t get when they buy any other house,” Gavre said.

“People will come in and say ‘Oh, I love that restaurant; omigod, that kitchen looks just like the one at Café 222′.”

Gavre’s restaurant, located in downtown San Diego has been profiled by Food Network and is known for hand-made specialties like pumpkin waffles and her peanut butter-and-banana-stuffed French toast.

One happy buyer will walk away with two homes on the lot separated by a courtyard and a free breakfast once a week.  The price tag on the property may be $1.4 million but the incentive will save you approximately $8,000 in free food.  Now, what foodie can pass up that offer?

Hat tip to TL for sending this along from the latimes.com:

Real estate agents listing an $8-million home in Santa Monica wanted to ensure a good crowd for an open house last month, so they hired a stilt walker, shirtless male jugglers and a contortionist who floated in the pool, encased in a clear plastic bubble.

Over near the Beverly Center, an agent stationed models in front of a new condominium project. Wearing chocolate velour robes and flip-flops, the young men and women served up free drinks — in keeping with the marketing theme that “it’s always cocktail hour” at these condos.

Another real estate veteran went all the way to Spain to drum up business. The Westside agent rented a cabana for a week at Ibiza’s trendy Blue Marlin beach club, pouring champagne for yacht owners as a flat-screen television flashed video of sumptuous Southern California living for jet-setters who might fancy a second, third or fourth luxury home.

When marketing a multimillion-dollar mansion, a plate of cookies in the foyer just won’t do. And with more homes than buyers, agents have begun pulling out all the stops.

“Price is key, but it’s the presentation that will sell the property,” said Calabasas agent Lisa Sorrentino, who hired the Aerial Showgirls troupe to stage the mini-circus in the Santa Monica backyard. She said the strategy worked; someone who stopped by is now dickering to lease the property for $22,500 a month.

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When houses all around are selling for high-$700,000s and up, why does a house have to get down to $639,000 before selling?  Last month, two brand-new houses that were virtually the same square footage sold on the same street for $835,000 and $839,000.

Last week we mentioned the new Redfin feature that exposes the sales counts for each agent:

http://www.redfin.com/real-estate-agents/search-scouting-report

They have unleashed a treasure trove of information, but, they don’t talk about how to use it effectively.  Let’s examine!  Here are some general thoughts, feel free to comment!

1.  Number of sales.

An agent needs to be experienced in today’s market if they hope to bring quality help to the table.  If they are consistently selling at least one home a month, then they must be creating some value – but you still need to figure out what it is, and if it is what you want/need.  Is their 12-month number greater than their 36-month average?  If so, they are getting better at handling today’s market.

2.  Do agents report sales individually, or as a team?

Check their website for team members, and if you see 10-20 people, then you know that everyone has their role, and they probably report as a team.  If they list the names of individual agents, check their stats to confirm.

General guide:

0-60 sales per year: individual agent reporting

60-150: team reporting

150 and up: Flipper or REO listing agent reporting

Try not to make assumptions if you can help it.  An easy way to check is to act like a buyer and call for the lead agent, to see if you can get him or her on the phone.  Not everyone is available at every minute, but at least you’ll be able to judge what kind of operaton they are running.

3.  How did they do on price?

For seller-sales:  When a potential listing agent tells you a price, you want to know if they are accurate, or high-balling you just to get the listing.  The average days-on-market stat is unreliable, due to “refreshing” – agents cancelling their old listing, and re-inputting to create new urgency. 

Instead, check their solds for prices changes/refreshes.   If they are taking several price reductions and 6-12 months to sell the majority of their listings, they don’t appreciate how stale listings get hammered on price these days.  Ideally, hire an agent who is consistently selling their listings in less than 60 days.

Also – judge their photos and descriptions on their listings – are they what you want for yours?

For buyer-sales:  You can compare recent sales prices to zestimates, but it looks like Zillow is updating zestimates immediately after a sale.  Look at the agent’s sales in areas where you know the comps well – how did they do? 

Also check to see if the agent is selling quality homes, in quality areas – can they grab the hot buys?  In a close bidding war, it’s the little things your agent does, and their reputation in general, that will make the difference.

4.  Do they sell houses similar to the one you are selling or buying?

Does the agent have experience is evaluating the quality of upgrades properly?  Can they discuss the costs of repairs or improvements to homes in your price range?  It’s not imperative, but helpful if they can, and a way for them to add value. 

5.  Do they need to be a specialist in your area?

Judge the area-specialist question this way.  Do you yourself feel comfortable evaluating what a home is worth using internet tools?  If so, then figure that agents who have made it through the previous 4 questions are also good at using internet resources to evaluate prices/values, even if they haven’t sold a lot of homes in your area.

While it used to be an advantage to have seen the interiors of the comparable homes sold, these days you can know too much.  Buyers feel comfortable with the internet presentations, and are making critical decisions without spending the time to see every house in person.  An agent can serve you best by knowing exactly how buyers will react to what they see on-line.

Being an area specialist usually means making deals off the grid – ones you won’t see on the Redfin Scouting Report, so you have to ask the agent directly.  If they are representing sellers without exposing the house on the open market (active on MLS for at least a few days), then they aren’t doing you a favor if you’re selling.

6.  Don’t assume.

While having more data should empower buyers and sellers to make better decisions, these sales stats are already manipulated by agents.  Now that they are out in the open, they will be pimped further – it is what agents do.  You will always be better off to meet them in person, and ask a few simple questions.  Examples:

A.  How have you handled a recent bidding war?

B.  Do you have set strategies to achieve the best results for your clients?

C.  Describe a recent negotiation where your client was well-served?

D.  Tell me about a recent problem that was solved by your innovative solution?

People rarely ask questions, but they should.  The environment gets more challenging every day – ensure that you are getting quality assistance!

Eventually, everyone is going to be doing it, at this rate:

1.  The first house in this video shows why going direct to the listing agent can be concerning.

2.  The others demonstrate more short-sale shenanigans.

My specific beef about short-sale flipping:  When agents join the MLS membership they agree to share their listings with other agents by inputting them onto the MLS system within 48 hours, for all agents to sell. Those who don’t are breaking the rules. The MLS exists so you get to sell my listings, and I get to sell yours – that is the agreement.

The MLS people don’t enforce their own rules.  If an agent has a complaint about another agent, they have to build their own case and prosecute the offender themselves.  The penalty, if convicted?  A letter goes into their file.  No wonder there is lawlessness.

If we don’t police ourselves, somebody else will.  A reminder of agents being prosecuted here.

If the banks tire of being ripped off, maybe they will stop short sales altogether, and foreclose only?